Standard Aero ups B loan size; Blockbuster decreases loan size; UAL lowers DIP add-on pricing

By Sara Rosenberg

New York, Aug. 3 - A number of in-market deals underwent changes on Tuesday including Standard Aero opting to increase its term loan B and decrease its bond offering, Blockbuster Inc. opting to decrease its term loans A and B and come to market with a bond offering, UAL Corp. reverse flexing its debtor-in-possession add-on and M/C Communications LLC flexing pricing higher on its entire deal.

Standard Aero increased the size of its in-market eight-year term loan B to $325 million from $260 million and decreased the size of its proposed bond offering to $200 million from $265 million, according to a fund manager.

The upsized tranche is still priced at Libor plus 275 basis points, the fund manager said.

"They didn't say why they upsized it but it probably has something to do with maybe the bond market isn't as receptive right now as the loan market," the fund manager added.

The now $375 million credit facility (B2/B+) also contains a $50 million six-year revolver with an interest rate of Libor plus 275 basis points.

JPMorgan and Lehman Brothers are joint lead arrangers on the deal, with JPMorgan listed on the left. Credit Suisse First Boston is documentation agent.

Proceeds, combined with proceeds from the bond offering, will be used to help fund The Carlyle Group's acquisition of the Standard Aero division from Dunlop Standard Aerospace Group for about $670 million. The acquisition is expected to close in August.

Standard Aero is a provider of turbine engine maintenance, repair and overhaul for aircraft engines and industrial gas turbines.

Blockbuster reduces term loans

Blockbuster reduced the size of its credit facility (Ba2/BB/BB) by $300 million to $1.15 billion following the decision to come to market with a $300 million senior subordinated notes offering.

The reduction came from a $100 million decrease in the size of the seven-year term loan A to $100 million and a $200 million decrease in the size of the seven-year term loan B to $550 million, according to a market source. Pricing on the tranches remained unchanged at Libor plus 200 basis points.

The facility also contains a $500 million seven-year revolving credit facility, of which $150 million will be reserved for a Viacom letter of credit, with an interest rate of Libor plus 200 basis points. No changes were made to this tranche.

In connection with these modifications, the syndicate also added a 50% cash flow sweep to the loan, another market professional said.

Bank leverage will be 1x, total leverage will be 1.6x and total leverage on a rent-adjusted basis will be 4.6x, the professional added.

JPMorgan, Citigroup and Credit Suisse First Boston are the lead banks on the deal, with JPMorgan listed on the left.

Security is pledges of the stock of some of Blockbuster's direct and indirect subsidiaries.

Blockbuster is looking to get the new credit facility to help fund the Viacom Inc. "split off."

This new facility will replace the company's existing revolver and will be used, along with the bond deal, to pay a special distribution of $5 per share, or about $905 million, to its stockholders and to pay some of the transaction costs related to the special distribution, the split-off and credit agreement. The credit facility will also be available for working capital and general corporate purposes.

Viacom currently owns 81.5% of Blockbuster's outstanding shares. This means Viacom will receive a cash payment of $738 million in the special distribution.

The special distribution is part of the plan to separate Blockbuster and Viacom. This separation will occur through an exchange offer under which Viacom stockholders will have the chance to exchange some or all of their shares of Viacom class A or class B common stock for shares of Blockbuster class A and class B common stock held by Viacom. The exchange ratio for the offer will be set prior to the beginning of the offer.

The divestiture is expected to be completed in the third quarter of 2004.

Blockbuster is a Dallas provider of in-home movies and game entertainment.

UAL reverse flex

The syndicate on UAL Corp.'s debtor-in-possession facility went out to accounts with a reverse flex proposal that would lower pricing on the in-market $500 million add-on to Libor plus 500 basis points from Libor plus 550 basis points, according to a market source, who added that the 3% Libor floor was left in the credit agreement.

The bankrupt company received lender approval in late June to amend the DIP in order to increase the size but syndication has not yet been completed, the source explained.

JPMorgan Chase, Citigroup and CIT are the lead banks on the deal and GE Capital signed on as a new lender at the time of the amendment.

Also, the DIP increase still needs to get bankruptcy court approval, which will be sought at the omnibus hearing scheduled for Aug. 20.

The DIP matures on June 30, 2005, giving the company additional flexibility as it moves to assemble an exit financing package.

UAL, an Elk Grove Township, Ill., airline carrier, filed for Chapter 11 on Dec. 9, 2002.

M/C Communications ups pricing

M/C Communications increased pricing on its $150 million 61/2-year term loan to Libor plus 450 basis points from Libor plus 350 basis points, according to a market source.

Furthermore, pricing on the $15 million five-year revolver will be increased from Libor plus 325 basis points although how high is still to be determined, the source said.

Following the flex, the syndicate closed the books on the deal.

The deal also comes with a $50 million mezzanine tranche that was not distributed as part of the syndication.

Lehman is sole on the deal that will be used to help fund Bain Capital's leveraged buyout of the company.

M/C Communications is a Boston producer of medical conferences.

Entravision tightens talk

Entravision Communications Corp. tightened price talk on its $400 million senior secured credit facility (B1/B+), with the $250 million 71/2-year term loan B and the $150 million 61/2-year revolver now expected to price in the Libor plus 200 basis points area, as opposed to previous guidance of Libor plus 200 to 225 basis points.

"No one expects it to price at Libor plus 225 basis points. It's three to four times oversubscribed," a market source explained.

The deal was already oversubscribed within a few hours of last week's bank meeting as several orders came in pre and post meeting, with some attributing the success to positive investor sentiment toward deals in the broadcasting sector.

Goldman Sachs and Union Bank of California are the lead banks on the deal, with Goldman listed on the left.

Proceeds will be used to refinance outstanding bank borrowings under the company's existing $400 million credit facility, for general corporate purposes and to fund the potential repurchase of the remaining shares of its series A preferred stock.

Entravision is a Santa Monica, Calif., diversified Spanish-language media company.

Nortek subscribed

Nortek Holdings Inc.'s $800 million credit facility (B1/B+) is moving along nicely as the $700 million seven-year term loan is already subscribed with more commitments expected to come soon.

"It's going extremely well. Some very large commitments came in this past week. A lot of guys are still working on it but it's moving quickly now," a market source said.

The term loan is talked at Libor plus 275 basis points, while the $100 million six-year revolver is talked at Libor plus 250 basis points with a 50 basis points commitment fee.

UBS and Credit Suisse First Boston are the lead banks on the deal that launched during the last week of July, with UBS listed on the left.

Proceeds, combined with proceeds from a proposed $625 million senior subordinated notes offering, will be used to help fund Thomas H. Lee Partners', in partnership with management, approximately $1.75 billion acquisition of Nortek.

The transaction is expected to close in the third quarter.

Nortek, a Providence, R.I., designer, manufacturer and marketer of residential and commercial building products, is owned by some members of management and Kelso and Co. LP.

Ply Gem sets launch

Ply Gem Industries Inc. has scheduled a bank meeting for Monday to launch its $161 million in incremental senior secured credit facilities (B1), according to a market source. Previously it was known that the deal would launch early this month but timing had not yet been nailed down.

UBS Securities and Deutsche Bank are joint lead arrangers on the deal, with UBS left lead, and JPMorgan is a co-manager.

The facility consists of a $20 million five-year incremental revolver and a $141 million incremental term loan.

Since the company is basically layering the new debt on top of existing debt, pricing is expected to stay in line with the revolver at Libor plus 250 basis points and the term loan at Libor plus 275 basis points, the source added.

Proceeds will be used to help fund the acquisition of MW Manufacturers Inc. from Investcorp for about $320 million in cash. Investment vehicles associated with Caxton-Iseman Capital Inc., the New York-based private equity firm that acquired Ply Gem in February, have agreed to make an additional cash investment in Ply Gem to support the transaction as well.

Completion of the acquisition, which is expected to occur by the end of August, is subject to customary closing conditions.

Ply Gem is a Kearney, Mo., manufacturer and distributor of products for use in the residential new construction, do-it-yourself and professional renovation markets. MW is a Rocky Mount, Va., manufacturer of vinyl, clad-wood, vinyl-wood, wood and composite window and patio door products.

Sunny Delight meeting

Sunny Delight Beverages Co.'s Tuesday bank meeting was said to have gone well as "people seemed pretty amenable" and "no difficult questions" were asked, according to a market source.

The deal has a shortened syndication period with commitments due Aug. 13.

The $295 million credit facility consists of a $170 million first-lien term loan (B1/B+) talked at Libor plus 400 to 450 basis points, a $40 million revolver (B1/B+) that will price 25 basis points inside of the first-lien term loan and an $85 million second-lien term loan (B2/B-) talked at Libor plus 700 to 800 basis points.

The first-lien term loan contains call protection of 101 in year one and the second-lien term loan contains call protection of 102 in year one and 101 in year two, the source said.

UBS is the lead bank on the deal.

Proceeds will be used to help fund J.W. Childs Associates LP's acquisition of the Sunny Delight and Punica juice-based drink businesses from The Procter & Gamble Co.

This is the second time that the company has come to market with a credit facility for this acquisition. In mid-July Cincinnati-based Sunny Delight put its then proposed $250 million credit facility on hold since the company had "experienced softness in certain markets," a source previously told Prospect News.

CCC anticipated to go well

CCC Information Services Group Inc.'s $207.5 million credit facility (B1/B+) was said to have a good launch on Tuesday and syndication is expected to go smoothly, according to a market source.

"I think it went very well," a market source said regarding the bank meeting. "I think guys will be okay with the credit and it will go fine."

The facility consists of a $30 million five-year revolver with a 50 basis points commitment fee and a $177.5 million six-year term loan B.

Credit Suisse First Boston is the sole lead arranger and bookrunner on the deal and Jeffries & Co. is syndication agent.

Proceeds will be used for recapitalization purposes.

Last week, the company announced the commencement of a self tender offer for up to 11.2 million shares at a price of $18.75 per share. The shares that the company is offering to purchase represents approximately 41.9% of its shares issued and outstanding on June 30. The tender offer will expire on Aug. 24.

CCC Information Services is a Chicago supplier of technology solutions to the automotive claims and collision repair industries.

Dr. Pepper repricing struggles

Dr. Pepper/Seven Up Bottling Group Inc.'s repricing deal may be struggling to get done according to market talk, with some hearing that investors are trying to get a group together to fight the proposal.

The company is looking to get pricing of Libor plus 200 basis points with a stepdown to Libor plus 175 basis points on a $696 million term loan B, according to a market source.

The tranche will likely carry 101 call protection, the source added.

Deutsche and JPMorgan are the lead banks on the Dallas soft drink company's deal, with Deutsche left lead.

Revlon down on earnings

Revlon Inc.'s bank debt was lower by about half a point on Tuesday following the release of earnings numbers, with one trader quoting the paper at 101¼ bid, 102 offered and another trader quoting the paper at 101 3/8 bid, 101 5/8 offered.

For the second quarter, net sales declined about 2% to $316 million, compared with net sales of $322 million last year, operating loss was $1.8 million, versus an operating loss of $3.1 million last year, adjusted EBITDA was $23.7 million, compared with $20.6 million last year, and net loss was $38.9 million, or $0.11 per diluted share, compared with a net loss of $37.8 million, or $0.68 per diluted share, last year.

"We continued to make meaningful progress to strengthen our business and our balance sheet in the second quarter. We remain focused on driving the long-term health of the company, and I am confident that the actions we are taking to strengthen our strategic and operational approach to the business will position Revlon for long-term, profitable growth," said Jack Stahl, president and chief executive officer, in a company news release.

For the first six months of 2004, net sales advanced about 2% to $625 million, compared with net sales of $614 million in the same period last year, operating income was $18.3 million, versus an operating loss of $7.3 million in the first six months of 2003, adjusted EBITDA was $68.2 million, compared with $44 million last year, and net loss was $97.1 million, or $0.42 per diluted share, compared with a net loss of $86.5 million, or $1.60 per diluted share, in the first six months of 2003.

Revlon is a New York cosmetics, fragrance, and personal care products company.

Stanadyne steady at 101

Stanadyne Corp.'s $65 million six-year second-lien, covenant light term loan (B2/B+) hung in at the 101 bid, 101½ offered level throughout Tuesday's session after breaking in that context late afternoon Monday, according to a trader, who added that most of the trading activity on the name took place on the break.

The term loan is priced with an interest rate of Libor plus 350 basis points after reverse flexing on Monday from Libor plus 375 basis points.

The facility also contains a $35 million five-year asset-based revolver (B1/BB) with an interest rate of Libor plus 225 basis points.

Goldman Sachs is the sole lead bank on the deal.

Proceeds, combined with proceeds from a bond offering, will be used to help fund a leveraged buyout of the company by an affiliate of Kohlberg & Co. LLC. The LBO, which is expected to close during the third quarter, is subject to customary closing conditions.

On Monday, the company priced its $160 million 10-year senior subordinated notes at 10%. Price talk had been in the 9¾% area.

Stanadyne is a Windsor, Conn., provider of technology and services for engine components and fuel systems.

Allied Security closes

Allied Security closed on its new $260 million credit facility (B2/B+) consisting of a $50 million five-year revolver with an interest rate of Libor plus 450 basis points and a $210 million six-year term loan B with an interest rate of Libor plus 425 basis points and a stepdown to Libor plus 400 basis points if total leverage falls below 31/2x.

Originally the term loan B was talked at Libor plus 450 basis points but was reverse flexed during syndication on strong demand.

Bear Stearns was the lead bank on the deal that was used by the King of Prussia, Pa., private security company to help fund the now completed acquisition of Barton Protective Services and repay debt.

"The combination of Allied Security and Barton Protective Services will bring to market the best practices of two of the country's premier contract security firms, both known for the highest-quality service, performance excellence and employee training and retention, as well as proven success in key geographic and vertical markets," said Bill Whitmore, president and chief executive officer, in a company news release.

"The transaction strengthens and diversifies the company's position in key geographic and vertical markets, including Class-A office buildings, corporate complexes, hospitals, universities, financial institutions, tollbooth operations, residential communities, regional shopping malls, and other commercial facilities," Whitmore added in the release.

DaVita closes on term C

DaVita Inc. closed on its new $250 million six-year term loan C add-on (Ba2/BB) with an interest rate of Libor plus 175 basis points on Friday and amended some covenants contained in its credit agreement, according to a company news release.

The term loan C add-on will be used to fund the acquisition of Physicians Dialysis Inc. for about $150 million in cash, fund ongoing acquisition activities and fund potential share repurchases.

Credit Suisse First Boston was the sole lead arranger and sole bookrunner on the deal.

The El Segundo, Calif., provider of dialysis services is also currently in the process of extending the maturity of its term loan B to June 30, 2010. The $1.03 billion six-year term loan B is priced with an interest rate of Libor plus 200 basis points.

Credit Suisse First Boston is leading the term loan B transaction as well.

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