UPC Broadband, Sensata, Nutro Products free to trade; Lear trims pricing again

By Sara Rosenberg

New York, April 21 - A couple of new deals made their way into the secondary loan market on Friday, including UPC Broadband Holding BV, Sensata Technologies and Nutro Products Inc., and all three saw term loan bids quoted in the upper-par type of range.

Meanwhile, in the primary, Lear Corp. lowered pricing on its first-lien term loan B for the second time this week bringing the total difference in spread since the deal first launched into syndication to 50 basis points.

UPC Broadband's $3.8 billion equivalent in new institutional term loan debt broke for trading on Friday in a session that was described as an overall positive day for the market with a better general tone definitely noticeable, according to a trader.

"By far it was the most quiet day. But, things still felt pretty strong," the trader said.

"Treasuries stabilized. [The] high-yield market was better bid. [It] felt like there was a better tone out there - bit of reversal from the early part of the week," the trader added.

UPC's U.S. term loan J and the U.S. term loan K freed for trading in the generally positive environment at par ¾ bid, 101¼ offered and were quoted consistently in that context throughout the session, various traders said.

The dollar-denominated portion of the $1.9 billion equivalent term loan J due March 2013 and the $1.9 billion equivalent term loan K due December 2013 were priced with an interest rate of Libor plus 200 basis points.

The two term loans also contain euro-denominated portions, with that bank debt priced at Euribor plus 225 basis points.

During syndication, the term loans were upsized on two occasions - first to $1.31 billion equivalent each from $975 million equivalent each, and then to $1.9 billion equivalent each.

In addition, during syndication, pricing on the dollar-denominated term loan J and term loan K was reverse flexed from original price talk at launch of Libor plus 225 basis points, and pricing on the euro portion of the term loans was reverse flexed from Euribor plus 250 basis points.

Proceeds from the new term loan debt will be used to refinance the company's existing €140 million term loan F-1, $525 million term loan F-2, €550 million term loan H-1, $1.25 billion term loan H-2 and €1 billion term loan G.

Under the originally sized deal, the company was only going to refinance the term loan F-1, term loan F-2 and term loan H-2. However, based on how the book was building, the company opted to first add the term loan H-1 to the list of tranches being refinanced through this transaction and then decided to add the term loan G.

TD Securities and Bank of America are the lead banks on the deal that is expected to close during the week of May 1, with TD the left lead.

UPC Broadband is the Netherlands-based broadband company owned by Liberty Global Inc.

Sensata breaks

Sensata Technologies' credit facility also freed for trading during Friday's market hours, with the U.S. portion of the $1.35 billion equivalent term loan B quoted at par 5/8 bid, par 7/8 offered consistently throughout the day, according to a trader.

The dollar-denominated term loan B tranche is priced with an interest rate of Libor plus 175 basis points. During syndication, pricing on this paper was reverse flexed from original price talk at launch of Libor plus 200 basis points and the total term loan B size was increased by $150 million from $1.2 billion equivalent as the company downsized its bond offering to dollar equivalent of $750 million from an originally anticipated size of $900 million.

The euro-denominated portion of the term loan B is priced with an interest rate of Euribor plus 200 basis points.

Sensata's $1.5 billion equivalent credit facility (B1/BB-) also contains a $150 million revolver with an initial interest rate of Libor plus 200 basis points.

Morgan Stanley, Bank of America and Goldman Sachs are the lead banks on the deal that will be used, along with the bond proceeds, to fund the leveraged buyout by Bain Capital LLC of Texas Instruments Inc.'s Sensors & Controls business for $3 billion in cash.

Sensata Technologies is an Attleboro, Mass., supplier of engineered sensors and controls to the appliance, climate control, industrial, automotive, lighting and aircraft markets.

Nutro Products wraps around 101

Lastly on the secondary break front is Nutro Products' credit facility, as its $470 million term loan B began trading at par ¾ bid, 101¼ offered and stayed in that context throughout market hours, according to traders.

The term loan B is priced with an interest rate of Libor plus 200 basis points and carries a step down to Libor plus 175 basis points at 5.5x total leverage. During syndication, the term loan was upsized from $440 million as the concurrent high-yield bond deal was downsized to $315 million from $345 million, and pricing on the loan was reduced from original talk at launch of Libor plus 225 basis points with the addition of the step down.

Nutro Products' $570 million credit facility (B1/B) also contains a $100 million revolver.

JPMorgan and Lehman Brothers are joint lead arrangers on the deal that will be used to help fund a management-led buyout by Bain Capital Partners LLC of the company.

Nutro Products is a City of Industry, Calif., manufacturer of natural dog and cat foods.

Movie Gallery heads up

Movie Gallery Inc.'s term loan B felt firmer during the session as the company's bonds saw something like a 2 point improvement on the day, according to a trader.

The term loan B closed out Friday's market hours quoted at 90½ bid, 92½ offered, up from previous levels of 89½ bid, 91 offered, the trader said.

Earlier in the week, the Dothan, Ala.-based movie rental company came out with a couple of positive news items - a management agreement entered into with Hilco Real Estate LLC and anticipations of loan covenant compliance.

Under the management agreement with Hilco, a program will be initiated to restructure leases at more than 1,100 existing Movie Gallery and Hollywood Video stores.

As for the credit facility item, the company said that based on preliminary results for first quarter it expects to be in full compliance with the financial covenants for the reporting period ended April 2.

Lear cuts spread

Moving to the primary, Lear reduced pricing on its $1 billion first-lien term loan B (B2/B+) by 25 basis points just three days after making a price cut and reworking the capital structure of the deal, according to a market source.

With this latest change, the term loan B is now priced with an interest rate of Libor plus 250 basis points, down from the Libor plus 275 basis points price talk that emerged on Tuesday and the Libor plus 300 basis points price talk that the deal was originally launched with in early April, the source said.

In conjunction with the first pricing reduction deal, the deal had been tweaked to eliminate the originally proposed $200 million second-lien term loan (B3/B-), which was talked at Libor plus the 450 to 475 basis points, and upsize the term loan B by $400 million from $600 million.

The extra $400 million of first-lien term loan B debt that the company is getting compensates for the $200 million second lien that was done away with and adds $200 million of additional liquidity.

JPMorgan Chase Bank, Bank of America, Citibank and Deutsche Bank are the lead banks on the deal.

Proceeds from the new term loan will be used to refinance the company's $400 million term loan scheduled to mature in February 2007, to fund the retirement of the company's outstanding convertible senior notes and for general corporate purposes.

In connection with the new term loan B, Lear's primary credit facility is being amended and restated to, among other things, provide additional collateral for both the company's existing revolver and the new term loan, increase the revolver interest rate to Libor plus 225 basis points and provide additional flexibility under existing financial covenants through 2007.

Lear is a Southfield, Mich., supplier of automotive interior systems and components.

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