Sun Healthcare, Berry Plastics set talk; Oshkosh, Aramark slide on repricing pressure, market weakness

By Sara Rosenberg

New York, March 13 - Sun Healthcare Group Inc. released price talk on its credit facility in conjunction with its Tuesday launch and Berry Plastics Group Inc. began floating price talk on its new deal as it is gearing up to launch with a bank meeting Wednesday.

Over in the secondary, Oshkosh Truck Corp. and Aramark Corp. both saw their term loans drop, influenced by repricings and general market softness. This overall weakening also took its toll on names like Ford Motor Co., General Motors Corp. and Kelson Holdings LLC, just to name a few.

Sun Healthcare held a bank meeting on Tuesday to launch its proposed $435 million senior secured credit facility (Ba2/B), at which time price talk was revealed to be Libor plus 225 basis points on all tranches under the new deal, according to a buyside source.

Tranching on the facility is comprised of a $50 million revolver, a $40 million synthetic letter-of-credit facility, a $55 million delayed-draw term loan and a $290 million term loan B.

The deal was initially supposed to launch on March 6, however that bank meeting was delayed so as to wait for the company's filing of year-end numbers.

Credit Suisse, CIBC and UBS are the lead banks on the facility, which will be used to help fund the acquisition of Harborside Healthcare Corp., a nursing and long-term care company, from Investcorp for about $350 million in cash plus the refinancing or assumption of about $275 million in debt.

Originally, based on filings with the Securities and Exchange Commission, it was expected that the credit facility would carry a size of $505 million, consisting of a $430 million seven-year term loan and a $75 million six-year revolver, with both tranches priced at Libor plus 275 bps.

Sun Healthcare is an Irvine, Calif., operator of long-term and post-acute care facilities and a provider of therapy, medical staffing, home care and hospice services.

Berry Plastics price talk

Also on the price talk front, Berry Plastics came out with guidance on its proposed $1.56 billion credit facility ahead of the Wednesday bank meeting that will officially kick off syndication on the deal, according to a market source.

The $1.16 billion senior secured term loan B (B+) is being talked at Libor plus 175 bps, and the $400 million asset-based revolver is being talked at Libor plus 125 bps, the source said.

Credit Suisse and Deutsche Bank are the joint lead arrangers on the term loan, with Credit Suisse as administrative agent, Deutsche Bank as syndication agent and Bank of America, Goldman Sachs, Citigroup, JPMorgan and Lehman as co-documentation agents.

Bank of America and Goldman Sachs are the joint lead arrangers on the asset-based revolver, with Bank of American as administrative agent, Goldman Sachs as syndication agent and Credit Suisse, Deutsche Bank, Citigroup, JPMorgan and Lehman as co-documentation agents.

The new deal is being obtained in connection with the company's stock-for-stock merger with Covalence Specialty Materials Holding Corp.

Proceeds from the facility will be used to refinance the outstanding credit facilities at both Covalence and Berry.

Closing of the merger is expected to occur in April, subject to the receipt of required regulatory approvals.

Berry is an Evansville, Ind., plastic packaging company.

Tenneco reworks deal

Tenneco Inc. restructured its $830 million senior credit facility (Ba2/BB), eliminating its term loan B tranche, reducing the size and pricing on its synthetic letter-of-credit facility and upsizing both its revolver and term loan A, according to a market source.

With the changes, the seven-year synthetic letter-of-credit facility is now sized at $130 million, down from $177.5 million, and pricing was reverse flexed to Libor plus 150 bps from original talk of Libor plus 175 bps, the source said.

Meanwhile, the five-year revolver was upsized to $550 million from $375 million, with pricing remaining in line with original talk at Libor plus 150 bps, the source continued.

Furthermore, the five-year term loan A was upsized to $150 million from $100 million, with pricing also staying at Libor plus 150 bps.

And, lastly, the $177.5 million seven-year term loan B that was being talked at Libor plus 175 bps was dropped from the capital structure, the source added.

Allocations on the transaction are expected to go out on Wednesday, another source said.

JPMorgan and Deutsche Bank are the lead banks on the deal, with JPMorgan the left lead.

Proceeds will be used to refinance the company's existing $831 million senior credit facility, which consists of $356 million in term loans, a $155 million synthetic letter-of-credit facility and a $320 million revolver due December 2008.

Tenneco is a Lake Forest, Ill., designer, manufacturer and marketer of emission control and ride control products and systems for the automotive original equipment market and aftermarket.

Oshkosh falls with repricing news

Moving to the secondary, Oshkosh Truck's term loan B traded lower on Tuesday as the company announced a repricing of the debt, according to a trader.

The term loan B ended the day at par ½ bid, par ¾ offered, down from previous levels of par ¾ bid, 101 offered, the trader said.

Under the repricing proposal, the Oshkosh, Wis., specialty commercial, fire and emergency and military vehicles company is looking to lower the spread on the term loan B paper to Libor plus 175 bps from Libor plus 200 bps.

"I don't think the drop in levels is all due to the repricing," the trader remarked. "It's mostly from the market downturn. Everything is down from an eighth to a quarter to even a half. The stock market is down and we follow the stock market. People are selling and there are not many buyers."

Aramark also under pressure

Aramark's term loan B had a very similar story to Oshkosh during Tuesday's trading hours, with levels coming in on investor pushback from the company's recently announced repricing, but also on general weakness, according to a trader.

The term loan B ended the day at par 3/8 bid, par 5/8 offered, down from par 5/8 bid, par 7/8 offered, the trader said.

On Monday morning, Aramark held a lender call to launch a repricing proposal that would lower the spread on its U.S. term loan B, euro term loan B and synthetic letter-of-credit facility to Libor plus 175 bps from Libor plus 212.5 bps.

The tranches would carry a step up to Libor plus 200 bps if senior secured leverage is more than 4.75 times. The current step down provision under the tranches would be eliminated.

In addition, the tranches would also have 101 soft call protection for one year.

Goldman Sachs is leading the repricing.

This repricing would take effect on April 16, exactly three months from the date that the original deal closed.

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

Ford, GM, Kelson trade down

Other names affected by the negative market conditions on Tuesday included Ford, General Motors and Kelson Holdings, according to traders.

Ford, a Dearborn, Mich.-based automaker, saw its term loan close the day at par ¼ bid, par ½ offered, down from par 5/8 bid, par 7/8 offered, traders said.

General Motors, a Detroit-based automaker, saw its term loan end the session at par 3/8 bid, par 7/8 offered, down from previous levels of par 5/8 bid, 101 offered, traders continued.

And, Kelson, a manager and owner of power plants, saw its second-lien initially PIK term loan drop by about a point and a half to 97¾ bid, 98½ offered, traders added.

Level 3 closes

Level 3 Financing Inc. closed on its new $1.4 billion term loan (B1/B) due 2014 that's priced at Libor plus 225 bps, according to a market source.

During syndication, the tranche was upsized from $1 billion and pricing ended up at the low end of original guidance of Libor plus 225 to 250 bps.

Merrill Lynch and Morgan Stanley acted as the lead banks on the deal, with Credit Suisse, Citigroup and Wachovia involved as co-leads.

Proceeds from the term loan were used to refinance the company's existing $730 million term loan due 2011, which is priced at Libor plus 300 bps, and to purchase money debt.

The additional $400 million of proceeds raised through the upsizing were used to refinance more of Level 3's holdco notes per the company's announced liability management transactions.

Level 3 is a Broomfield, Colo., communications and information services company.

Mothers Work closes

Mothers Work, Inc. closed on its $90 million senior secured term loan B (B2) due March 13, 2013 that is priced at Libor plus 250 bps with a step down to Libor plus 225 bps based on leverage, according to a company news release.

Bank of America acted as the lead bank on the deal.

Proceeds from the term loan will be used to redeem the company's $90 million 11¼% senior notes.

In connection with this transaction, the company also amended its revolving credit facility to increase the size to $65 million from $60 million, extend the maturity to March 13, 2012 from Oct. 15, 2009, reduce the interest rate by 25 bps and allow for the new term loan debt.

Mothers Work is a Philadelphia-based designer and retailer of maternity apparel.

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