B/E Aerospace trims B loan spread; Northwest considering changes; Brock breaks; Movie Gallery softens

By Sara Rosenberg

New York, Aug. 16 - B/E Aerospace Inc. reduced pricing on its term loan B tranche as the deal received very strong investor interest. Also in the primary, market whispers are saying that Northwest Airlines Inc. may be considering some slight changes to its term loan pricing before the deal wraps up.

Meanwhile, in the secondary, freed for trading, with the term loan quoted atop par, and Movie Gallery Inc.'s term loan B weakened in trading on market technicals.

B/E Aerospace reverse flexed pricing on its $300 million term loan B by 25 basis points as the tranche was something like 3x oversubscribed, according to a fund manager.

The term loan B is now priced with an interest rate of Libor plus 175 basis points, down from original price talk at launch of Libor plus 200 basis points, the fund manager said.

B/E Aerospace's $450 million credit facility (Ba3/BB+) also contains a $150 million revolver that is priced in line with initial talk of Libor plus 175 basis points.

JPMorgan, UBS and Credit Suisse are the lead banks on the deal, with JPMorgan the left lead.

In July, the company closed on a $225 million credit facility led by the same three banks consisting of a $150 million five-year revolver with an interest rate of Libor plus 175 basis points and a $75 million six-year term loan with an interest rate of Libor plus 200 basis points.

Proceeds from this $225 million credit facility were used to help fund the company's tender offer for its 8½% senior notes and refinance its existing $50 million revolver.

Upon announcing the completion of the tender offer and the entrance into the new credit facility, the company had said that it plans on raising a new term loan, the proceeds of which would be used to repay all outstanding amounts borrowed under the revolver, and to negotiate a new revolver at that time.

B/E is a Wellington, Fla., manufacturer of aircraft cabin interior products and an aftermarket distributor of aerospace fasteners.

Northwest mulling over tweaks

Northwest Airlines is rumored to be contemplating some modifications to pricing on its $975 million term loan; however, the official word at this time is that no changes have been made to the deal, according to a market source.

The term loan is being talked at Libor plus 250 basis points.

"I heard they're talking about flexing pricing up slightly and then adding a grid based on ratings for when the company exits Chapter 11 and the DIP facility becomes the exit facility," the source remarked.

"Not hard numbers yet, just talk," the source added.

Northwest's $1.225 billion DIP facility (Ba2/BBB-), which is convertible into a permanent five-year exit financing facility upon the company's bankruptcy emergence, also includes a $250 million revolver talked at Libor plus 250 basis points.

Prior to the deal's launch, the transaction was expected to carry a size of $1.375 billion consisting of a $1.225 billion term loan and a $150 million revolver.

However, at the actual Aug. 7 bank meeting, lenders were presented with a slightly downsized deal with different tranching.

In the actual court document filed in July that described the DIP facility, the company had said that a commitment was received for a $975 million to $1.225 billion term loan and a $150 million to $250 million revolver, meaning that the revised structure did fall in the realm of the company's initial expectations.

Citigroup and JPMorgan are the lead banks on the Eagan, Minn.-based airline company's DIP facility, with Citi acting as the left lead.

Proceeds from the DIP facility will be used to repay amounts owed under the company's existing DIP facility, and, at the company's option, some proceeds will be used to replace or provide cash collateral for the first-lien obligations.

Brock frees to trade

Switching to trading, Brock Holdings' credit facility hit the secondary with its $157 million term loan quoted at par ¼ bid and then at par 3/8 bid, with no offers seen, according to a market source.

The term loan is priced with an interest rate of Libor plus 250 basis points.

Brock's $182 million credit facility also contains a $25 million revolver.

Bank of America is the lead bank on the deal that will be used to help fund the leveraged buyout of Brock by Lindsay Goldberg & Bessemer.

Brock is a Beaumont, Texas-based provider of industrial maintenance services.

Movie Gallery trades lower

Also in the secondary, Movie Gallery's term loan B fell by about a half a point to one full point during Wednesday's market hours simply on market technicals, according to a trader.

The term loan B closed the day quoted at 93 bid, 94 offered, down from around 94 bid, 94½ offered, the trader said.

Last week, the bank debt had come under pressure after the company released disappointing second-quarter results, dropping from the 97-plus area into the 94-95 type of range where it basically had been holding steady until now.

The second-quarter results included a net loss of $14.9 million, or $0.47 per diluted share, compared with a loss of $12.2 million, or 39 cents per share, during the same period last year, and total revenues of $601.3 million as compared to $504.7 million in the comparable period last year and adjusted EBITDA of $57.6 million.

The company had also announced that it hired Merrill Lynch & Co. as an adviser to explore opportunities to strengthen its balance sheet and Alvarez & Marsal Inc., a turnaround management, restructuring and corporate advisory firm.

Movie Gallery is a Dothan, Ala.-based video rental company.

Kendle closes

Kendle International Inc. completed its acquisition of the Phase II-IV Clinical Services business of Charles River Laboratories International, Inc. for about $215 million in cash plus a working capital adjustment, according to a company news release.

To help fund the transaction, Kendle got a new $225 million senior secured credit facility (B1/B+) consisting of a $200 million six-year term loan with an interest rate of Libor plus 275 basis points and a step down to Libor plus 250 basis points under certain conditions, and a $25 million five-year revolver with an interest rate of Libor plus 275 basis points.

During syndication, pricing on the term loan and the revolver was flexed up from original talk at launch of Libor plus 250 basis points, and the step was added to the term loan.

UBS acted as the lead arranger on the deal.

Kendle is a Cincinnati-based clinical research organization that provides a range of phase 1-4 clinical development services to the pharmaceutical and biotechnology industries.

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