Baldor, Sbarro set talk; Aramark blows out; RiskMetrics breaks; Kodak, TransDigm soften in trading

By Sara Rosenberg

New York, Jan. 10 - Baldor Electric Co. and Sbarro Inc. released price talk on their credit facilities as both deals were launched with bank meetings during Wednesday's market hours.

Also in the primary, Aramark Corp.'s strip of institutional bank debt is already heavily oversubscribed leaving some to contemplate a potential tightening in pricing.

On the secondary front, RiskMetrics Group's credit facility freed for trading, Eastman Kodak Co.'s term loan B dropped on repayment expectations and TransDigm Group Inc.'s term loan B weakened following news of an acquisition that would pile on more debt.

Baldor Electric held a bank meeting on Wednesday to officially kick off syndication on its $1.2 billion credit facility (Ba3/BB), and in conjunction with the launch, price talk on the term loan tranche emerged, according to a buyside source.

The $1 billion seven-year term loan is being talked at Libor plus 225 basis points, the source remarked.

In addition to the term loan, the credit facility also includes a $200 million five-year revolver.

BNP Paribas is the lead bank on the deal.

Proceeds will be used to help fund the acquisition of Reliance Electric Co. and certain of its affiliated companies from Rockwell Automation, Inc. for $1.8 billion, comprised of $1.75 billion in cash and 1.6 million shares of Baldor common stock.

Baldor is a Fort Smith, Ark., manufacturer of industrial electric motors, drives and generators.

Sbarro spread guidance

Sbarro also came out with price talk on its $175 million credit facility (Ba3/B) as it too was launched with a bank meeting during the session, according to a market source.

Both the $150 million term loan and the $25 million revolving credit facility were presented to lenders with opening price talk of Libor plus 300 bps, the source said.

Bank of America and Credit Suisse are the lead banks on the deal, with Bank of America the left lead.

Proceeds from the credit facility, along with $150 million of bonds, will be used to help fund MidOcean Partners' leveraged buyout of Sbarro, a Melville, N.Y., quick service Italian restaurant company.

Originally, it was anticipated that the term loan would be sized at $100 million and the bond deal would be sized at $200 million, but once timing on the deal firmed back in December, the company decided to move $50 million out of its bond deal and into its term loan.

Scotts Miracle-Gro talk emerges

Meanwhile, guidance on The Scotts Miracle-Gro Co.'s in-market $2.1 billion five-year senior secured credit facility also surfaced Wednesday as the company said in an SC TO-I filed with the Securities and Exchange Commission that it expects both tranches on the deal to carry an initial spread of Libor plus 125 bps.

Pricing on the bank debt will be tied to a grid that is based on the company's leverage ratio. Spreads can range anywhere from Libor plus 62.5 bps to Libor plus 150 bps, the filing added.

The facility, which was launched with a bank meeting last week, is comprised of a $550 million term loan and a $1.55 billion revolver.

The company will have the ability to increase the total amount of the revolver by $200 million allocated on a pro-rata basis, subject to demand in the syndication process.

JPMorgan and Bank of America are joint lead arrangers on the deal, Citigroup is a co-arranger, and JPMorgan, Bank of America and Citi are joint bookrunners. JPMorgan is the administrative agent and Bank of America is the syndication agent.

Proceeds from the credit facility will be used to help fund a recapitalization.

Under the recapitalization plan, the company is offering to repurchase up to $250 million of its own shares through a Dutch auction tender offer, will pay a special one-time dividend of $500 million to shareholders, is tendering to repurchase its existing $200 million of 6 5/8% senior subordinated notes and will refinance its existing $1.05 billion credit facility.

The Dutch auction tender offer and the senior subordinated notes tender offer both expire on Feb. 8.

The company expects to use its free cash flow to repay debt, resulting in improved net income growth through year-to-year savings in interest expense and a return of leverage ratios back to current levels by 2011.

Scotts Miracle-Gro is a Marysville, Ohio, marketer of branded consumer lawn and garden products.

Aramark nets heavy interest

Aramark's strip of institutional bank debt -comprised of a $250 million seven-year synthetic letter-of-credit facility and a $3.66 billion seven-year term loan B - has already received more than $6 billion in orders, giving some the impression that a tightening of the current Libor plus 250 bps spread could be in store for the deal, according to a market source.

A bank meeting to officially launch the deal into syndication just took place this past Monday. However, sources had previously told Prospect News that commitments started pouring in even before the meeting took place.

Aramark's $4.51 billion credit facility (Ba3/B+) also includes a $600 million six-year revolver that is being talked at Libor plus 200 bps.

When the deal was first announced, the term loan B was anticipated to carry a size of $3.755 billion; but, prior to launch, the tranche was downsized by $95 million as the company decided to keep more of its existing debt in place.

Goldman Sachs and JPMorgan are joint bookrunners, joint lead arrangers and co-syndication agents on the facility that will be used, along with $2.27 billion of bonds, to help fund the buyout of Aramark by chairman and chief executive officer Joseph Neubauer and a group of investors.

Originally, the bond offering was expected to be sized at $2.47 billion, but it was scaled back a few weeks ago as the sponsors decided to contribute an additional $200 million of equity.

Under the acquisition agreement, Neubauer and investment funds managed by GS Capital Partners, CCMP Capital Advisors and J.P. Morgan Partners, Thomas H. Lee Partners and Warburg Pincus LLC will acquire Aramark in a transaction valued at $8.3 billion, including the assumption or repayment of about $2 billion of debt.

The transaction is expected to be completed at the end of January.

Aramark is a Philadelphia-based professional services company that provides food, hospitality, facility management services as well as uniform and work apparel.

Brickman accelerates deadline

Brickman Group Holdings Inc. moved up the commitment deadline for its $350 million term loan B to 5 p.m. ET Wednesday from Jan. 17 because the deal has been receiving such strong interest, according to a market source.

Although the term loan B was launched with opening price talk in the Libor plus 225 to 250 bps area, sources had previously said that the syndicate was really only focusing on the low end of that guidance based on demand.

In addition to the term loan B, the $400 million credit facility also includes a $50 million revolver tranche.

Lehman is the lead bank on the deal that will be used, along with $225 million of mezzanine senior subordinated notes committed by TCW/Crescent Mezzanine Management IV, LLC and $272 million of equity, to fund Leonard Green & Partners LP's acquisition of a controlling interest in the company.

In connection with the acquisition, the company plans to redeem all of its 11¾% senior subordinated notes due 2009.

Brickman is a Gaithersburg, Md., provider of landscape design and maintenance services.

RiskMetrics frees to trade

Switching to the secondary, RiskMetrics' credit facility broke for trading with the $300 million seven-year first-lien term loan B (Ba3/B+) quoted at par ½ bid, 101 offered and the $130 million 71/2-year second-lien term loan (B3/CCC+) quoted at 101¼ bid, 101½ offered, according to a trader.

The first-lien term loan B is priced at Libor plus 225 bps with a step down to Libor plus 200 bps when leverage is less than 4 times, and the second-lien term loan is priced at Libor plus 550 bps with call protection of 102 in year one and 101 in year two.

During syndication, pricing on the first-lien term loan B was reverse flexed from original talk of Libor plus 250 bps with the addition of the step, and pricing on the second-lien was reverse flexed from original talk of Libor plus 575 bps.

RiskMetrics' $455 million credit facility also includes a $25 million six-year revolver (Ba3/B+).

Bank of America is the lead bank on the deal that will be used to fund the acquisition of Institutional Shareholder Services Inc., a Rockville, Md.-based provider of proxy voting and corporate governance services to the institutional marketplace.

RiskMetrics is a New York-based financial risk management firm.

Kodak heads lower

Also in trading, Eastman Kodak's term loan B was pushed down into the low par context after the company announced plans to repay in full its $1.15 billion of secured term loan debt, according to a trader.

The funds for the term debt repayment will come from the sale of Kodak's Health Group to Onex Healthcare Holdings, Inc. for up to $2.55 billion.

Subject to regulatory and other approvals, it is anticipated that the sale will close in the first half of 2007.

In response to the news, Kodak's term loan B closed the day at par 1/8 bid, par ½ offered, down from Tuesday's levels of par 5/8 bid, par 7/8 offered, the trader said.

The trader went on to explain that although people expect to be taken out at a par, the bank debt is still trading slightly above par since timing of the take out is still uncertain.

Kodak is a Rochester, N.Y.-based digital imaging products, services and solutions company.

TransDigm falls on acquisition

TransDigm's term loan B also traded down on Wednesday, but this bank debt came under some pressure because the company is planning on raising additional bank and bond debt to fund its recently announced acquisition of Aviation Technologies Inc., according to a trader.

The acquisition is valued at about $430 million in cash.

Following the purchase, debt to EBITDA is expected to be around 5.7 times and EBITDA to interest coverage is expected to be around 2.9 times.

On the heels of the transaction announcement, Moody's Investors Service placed TransDigm's ratings on review for possible downgrade saying that the Aviation transaction represents a large, levered acquisition that could potentially increase the company's risk profile and leverage.

However, Standard & Poor's affirmed TransDigm's ratings with a stable outlook saying that although the acquisition will weaken credit protection measures, anticipated material debt reduction from free cash flow should restore an appropriate financial profile in the intermediate term.

In response to the proposed additional debt and possible Moody's downgrade, TransDigm's term loan B closed the day at par ¼ bid, par ¾ offered, down from previous levels of par ½ bid, 101 offered, the trader added.

TransDigm is a Cleveland-based designer, producer and supplier of highly engineered aircraft components.

© 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.