RadNet sets talk; Lear down as buyout price rises; Movie Gallery trades up; LCDX inches higher

By Sara Rosenberg

New York, July 9 - In primary happenings, RadNet Inc. came out with price talk on its proposed credit facility as the transaction is getting ready to launch to investors with a bank meeting on Thursday.

Moving to the secondary market, Lear Corp.'s term loan B headed lower as an increase in the buyout price for the company has some thinking there is "more debt to follow," Movie Gallery Inc.'s first-lien term loan B moved higher on recovery estimates and LCDX worked its way up for the first time in a while.

RadNet released price talk on its $445 million senior secured credit facility (B2/B) as it's gearing up to officially kick off syndication with a bank meeting this coming Thursday, according to a market source.

Both the $45 million revolver and a $400 million term loan are being talked at Libor plus 350 basis points, the source said.

General Electric Capital Corp. is the lead bank on the deal that will be used to refinance substantially all of the company's existing debt and will provide liquidity and working capital for future expansion.

The deal is expected to close in August.

RadNet is a Los Angeles-based provider of diagnostic imaging services through a network of fully owned and operated outpatient imaging centers.

Lear pressured by higher buyout

Switching to trading news, Lear's term loan B was noticeably softer on Monday after the company announced that American Real Estate Partners LP has raised the per share price that it is willing to pay for Lear, according to a trader.

Although no specific details were available on how this increase to the purchase price will be funded, some market players are nervous that the additional financing will come from more debt, which will increase leverage, which in turn pushed term loan B levels lower, the trader explained.

The term loan B ended the session at 97 bid, 98 offered, down from prior levels of 98 bid, 98½ offered, the trader said.

Under the revised agreement, American Real Estate Partners increased its offer price for shares of Lear common stock to $37.25 per share from $36 per share.

In conjunction with the amended agreement, Lear adjourned its annual meeting of stockholders until 1 p.m. ET July 16. The meeting was originally supposed to take place on June 27 and then it was postponed to July 12 before being postponed again.

In the event that the required stockholder vote approving the buyout is not obtained by July 16, American Real Estate Partners will be entitled to receive a payment of $12.5 million in cash as well as 335,570 shares of Lear common stock valued at $12.5 million.

Lear is a Southfield, Mich.-based supplier of automotive seating, electronics and electrical distribution systems.

Movie Gallery rises

Movie Gallery's first-lien term loan B traded stronger on Monday with some attributing the move to estimated recovery values.

The first-lien term loan B was quoted at 92 bid, 94 offered by one trader and slightly tighter at 92 bid, 93 offered by a second trader, up from previous levels of 90 bid, 92 offered.

Meanwhile, the second-lien term loan was higher on the bidside at 57 bid, 61 offered, compared with previous levels of 56 bid, 61 offered, the first trader remarked.

"There's no real news, just peoples' assumptions of what will happen with the restructuring," the first trader added.

Last week, the Dothan, Ala.-based video rental company said that it is considering strategic alternatives, including asset divestitures, recapitalizations, alliances with strategic partners and a sale to or merger with a third party.

In addition, the company revealed that it was not able to meet the financial covenants contained in its senior facility for the fiscal quarter ended July 1 due to significantly softer-than-expected second-quarter results.

The company is talking to its lenders about a way to remedy the defaults, including possibly seeking a waiver, amendment, forbearance or similar agreement.

In reaction to this news, Standard & Poor's cut the company's corporate credit rating to CCC+ from B-, and Moody's Investors Service downgraded Movie Gallery's corporate family rating to Caa3 from Caa1, revolver to B2 from B1, synthetic letter-of-credit facility and first-lien term loan to Caa2 from B2, and second-lien term loan to Caa3 from Caa1.

LCDX stronger

LCDX ended the day up by a little, a nice reprieve from the recent downward trend, according to traders.

The index closed the session at 97 bid, 97.10 offered, up from 96.90 bid, 97 offered, traders said.

"It bumped all around on either side of 97 today," one trader added.

As for the cash market, that was unchanged to maybe down an eighth of a point, a second trader remarked.

"The cash market felt a little bit softer. Things tried to feel better this morning and then this afternoon it kind of weakened up so it's unchanged to lower," the trader added.

Express closes

Golden Gate Capital completed its buyout of a 75% ownership interest in Express from Limited Brands, Inc. for pre-tax cash proceeds of $602 million, subject to closing adjustments, according to a news release.

To help fund the transaction, Express got a new $325 million credit facility consisting of a $200 million ABL revolver priced at Libor plus 125 bps and a $125 million term loan (B2/B) priced at Libor plus 275 bps.

Morgan Stanley acted as the lead bank on the deal.

Express is a Columbus, Ohio, fashion brand.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.