Brickman upsizes, cuts pricing; Covanta sets talk; Aramark break steals secondary spotlight

By Sara Rosenberg

New York, Jan. 19 - Brickman Group Holdings Inc. made some changes to its credit facility including upsizing the term loan B and lowering pricing on the tranche, and Covanta Energy Corp. released price talk on its new deal as syndication kicked off with a bank meeting Friday morning.

Meanwhile, in the secondary market, all eyes were on Aramark Corp. as its multi-billion dollar credit facility freed for trading with the strip of institutional loan debt quoted atop 101 amid strong activity.

Brickman announced a couple of modifications to its credit facility early Friday, such as an increase to the term loan B size and accordion feature and a decrease to the term loan B spread, according to a market source.

With the changes, the term loan B is now sized at $375 million, up from an original size of $350 million, and pricing on the paper is now Libor plus 200 basis points, down from original talk at launch in the Libor plus 225 to 250 bps area, the source said.

In addition, the accordion feature under the term loan B was increased to $100 million from $75 million, the source added.

The term loan B has been receiving such strong interest from the market during the syndication process that the commitment deadline had been accelerated by about a week.

Brickman's $425 million credit facility also includes a $50 million revolver that is priced at Libor plus 250 bps with a leverage-based grid. No changes have been made to the revolver during syndication.

Lehman is the lead bank on the deal that will be used, along with $200 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.

Originally, the mezzanine senior subordinated note financing was expected to carry a size of $225 million, but the notes were downsized by $25 million in connection with the term loan B being upsized by $25 million, the source explained.

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

Covanta price talk

In other primary happenings, Covanta Energy announced opening price talk of Libor plus 200 bps on its institutional bank debt as a bank meeting to launch the transaction was held early in the session, according to a market source.

The institutional debt is comprised of a $680 million seven-year term loan B and a $320 million seven-year synthetic letter-of-credit facility.

The company's $1.3 billion credit facility also includes a $300 million six-year revolver with a 50 bps commitment fee.

There is a $400 million accordion feature under the credit facility.

Financial covenants include a maximum leverage ratio, maximum capital expenditures and a minimum interest coverage ratio.

JPMorgan, Lehman and Merrill Lynch are the lead banks on the deal that will be used to help refinance the company's existing credit facility and will be available for working capital and general corporate needs, including the repurchase of its indirect subsidiaries' outstanding notes.

The company intends to begin tender offers to repurchase about $612 million in principal amount of notes, including the outstanding 8.5% senior secured notes due 2010 of MSW Energy Holdings LLC, the outstanding 7.375% senior secured notes due 2010 of MSW Energy Holdings II LLC and the outstanding 6.26% senior notes due 2015 of Covanta ARC LLC.

Covanta's ability to close on the credit facility is conditioned on raising at least $400 million, but no more than $450 million, in proceeds from a senior convertible debentures offering and common stock offering.

Along those lines, the company announced plans on Friday to sell $325 million of convertibles and raise $125 million through the sale of common stock. Lehman, JPMorgan and Merrill Lynch are the bookrunners on these financings, with Lehman the left lead.

The transactions are expected to close in February.

Covanta is a Fairfield, N.J., renewable energy and waste disposal company.

Aramark trades atop 101

Moving to the secondary, Aramark's credit facility freed up with the strip of term loan B and synthetic letter-of-credit facility trading very actively atop 101 throughout the session, according to a trader.

More specifically, the strip of institutional bank debt was quoted at 101 1/8 bid, 101 3/8 offered on the open, moved up to 101 3/8 bid, 101 5/8 offered during trading, and then settled back down to 101 1/8 bid, 101 3/8 offered where it ended the day, the trader said.

The $4.15 billion seven-year term loan B and the $250 million seven-year synthetic letter-of-credit facility are priced at Libor plus 212.5 bps with a step down to Libor plus 200 bps when senior secured leverage is less than 3½ times.

During syndication, the term loan B was upsized from $3.66 billion as the company's bond deal was downsized to $1.78 billion from $2.27 billion, pricing on the heavily oversubscribed term loan B and synthetic letter-of-credit facility was reverse flexed from most recent talk of Libor plus 225 bps and original talk at launch of Libor plus 250 bps, and the pricing step down provision was added to the two institutional tranches.

Aramark's $5 billion credit facility (Ba3/B+/BB-) also includes a $600 million six-year revolver that is priced at Libor plus 200 bps. No changes were made to the revolver tranche throughout syndication.

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

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.

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