Sealed Air tweaks structure; Smart Modular firms OID; Insight Pharmaceuticals holds steady

By Sara Rosenberg

New York, Aug. 25 - Sealed Air Corp. made some changes to its credit facility, opting to get more term loan A borrowings and less term loan B borrowings as syndication of the pro rata bank debt resulted in oversubscription.

Also, Smart Modular Technologies Inc. nailed down the original issue discount on its term loan B, and Plaze Inc.'s credit facility is oversubscribed at initial terms.

Over in the secondary market, Insight Pharmaceuticals Corp.'s first- and second-lien term loans held steady from their recent breaking prices with levels seen right around their original issue discounts in light activity.

Sealed Air shifts funds

Sealed Air's pro rata syndication process was a success as the tranches were oversubscribed and, because of that, the company decided to upsize its five-year term loan A to $1.1 billion from $1 billion and downsize its seven-year term loan B to $1.2 billion from $1.3 billion, according to a market source.

The company's $3 billion credit facility (Ba1/BB+) also includes a $700 million five-year revolver.

Initially, based on filings with the Securities and Exchange Commission, it was expected that the term loan A would be sized at $750 million and the term loan B would be sized at $1.55 billion, but when the pro rata was launched, a revised structure emerged.

The revolver and term loan A were launched to investors on July 25. Syndication of the B loan has not yet started, and the current expectation is that it will kick off sometime next month.

Sealed Air pricing

Pricing on Sealed Air's term loan A and revolver continues to be talked at Libor plus 250 basis points, with the revolver having a 50 bps unused fee, the source said. This pricing is in line with what the company had outlined in filings with the SEC.

Official talk on the term loan B has not yet emerged, but the regulatory filings said the debt would be priced at Libor plus 275 bps on the U.S. piece and Euribor plus 300 bps on the euro piece, with the entire tranche having a 1% Libor/Euribor floor.

Citigroup Global Markets Inc., Bank of America Merrill Lynch, BNP Paribas Securities Corp. and RBS Securities Inc. are the lead banks on the deal.

The company is also planning on approaching the high-yield market with a $1.5 billion senior unsecured notes offering.

Sealed Air buying Diversey

Proceeds from Sealed Air's credit facility and notes will be used to fund the purchase of Diversey Holdings Inc. from the Johnson family and Clayton, Dubilier & Rice LLC for $2.1 billion in cash and an aggregate of 31.7 million shares of Sealed Air common stock. The transaction is valued at $4.3 billion.

In connection with the acquisition, $1.4 billion of Diversey net debt will be refinanced.

Pro forma leverage will be 4.4 times.

Closing is expected to take place in the fourth quarter, subject to customary regulatory approvals.

Sealed Air is an Elmwood Park, N.J.-based manufacturer of packaging and performance-based materials and equipment systems for food, industrial, medical and consumer applications. Diversey is a Sturtevant, Wis.-based provider of cleaning, sanitization and hygiene products.

Smart Modular finalizes OID

Smart Modular set the original issue discount on its $310 million six-year first-lien term loan B (B2/B+) at 90, versus prior unofficial talk that it was being shopped in the low-90 context and initial talk at launch of 98 to 981/2, according to a market source.

Pricing on the term loan B is Libor plus 700 bps with a 1.25% Libor floor, and there is call protection of 103 in year one, 102 in year two and 101 in year three.

Earlier in the process, the term B was upsized from $300 million, pricing was increased from talk in the Libor plus 650 bps area, call protection was revised from 102 in year one and 101 in year two, and the maturity was shortened from seven years.

The change to the B loan size was made to help pay for the higher pricing and the wider discount price.

Smart Modular revolver

Smart Modular's $360 million senior secured credit facility, which allocated on Thursday, also includes a $50 million five-year first-lien first-out revolver (B1).

J.P. Morgan Securities LLC and UBS Securities LLC are the lead arrangers and bookrunners on the deal that will be used, along with up to $381 million of equity, to fund the buyout of the company by Silver Lake Partners and Silver Lake Sumeru for $9.25 per share in cash. The transaction is valued at about $645 million.

Closing is expected in the third quarter, subject to receipt of shareholder, which was obtained earlier this month, and regulatory approval.

Smart Modular is a Newark, Calif.-based manufacturer of memory modules and solid-state storage products.

Plaze well-met

Plaze's $150 million senior credit facility has received strong reception from investors, resulting in oversubscription of the transaction at initial terms, according to a market source.

The facility, which is comprised of a $20 million revolver and a $130 million term loan, is being talked at Libor plus 500 bps with a 1.5% Libor floor and an original issue discount of 991/4.

GE Capital Markets and PNC Capital Markets LLC are the lead banks on the deal that will be used, along with $50 million of mezzanine debt, to fund the buyout of the company by Olympus Partners.

Leverage through the senior facility is 3.75 times and leverage through the mezzanine financing is 5.25 times.

Plaze is a St. Clair, Mo.-based full service contract aerosol and liquid packager.

Insight quoted around OID

Moving to the secondary, Insight Pharmaceuticals' $255 million first-lien term loan was quoted at 98 bid, 99 offered on Thursday, in line with where it was quoted when it freed up for trading late in the day Wednesday, according to a trader, who said that he has seen no activity in the name since the break.

A second source, meanwhile, had the first-lien term loan quoted at 98½ bid, 99½ offered, and the $145 million second-lien term loan quoted at 98 bid, 99 offered, unchanged from breaking levels.

Pricing on the first-lien term loan is Libor plus 600 bps with a 1.5% Libor floor, and it was sold at an original issue discount of 981/2. There is 101 soft call protection for one year.

Second-lien pricing is Libor plus 1,175 bps with a 1.5% floor, and it was sold at a discount of 98. The tranche is non-callable for one year, then at 103 in year two, 102 in year three and 101 in year four.

The company's $420 million credit facility also includes a $20 million revolver.

Insight lead banks

GE Capital Markets, SunTrust Robinson Humphrey Inc. and RBC Capital Markets LLC are the lead banks on Insight Pharmaceuticals' credit facility that will be used for acquisition financing.

During syndication, the first-lien term loan was downsized from $290 million, bringing first-lien leverage down to 3.1 times from 3.56 times originally, pricing was flexed up from revised talk of Libor plus 550 bps and initial talk of Libor plus 500 bps, the discount widened from 99 and soft call protection was added.

As for the second-lien loan, it was upsized from $110 million, pricing was flexed up from Libor plus 900 bps, the discount widened from 98½ and call protection was sweetened from 103 in year one, 102 in year two and 101 in year three.

Insight Pharmaceuticals is a Langhorne, Pa.-based marketer and distributor of branded over-the-counter pharmaceutical products.

Omnicare closes

In other news, Omnicare Inc. closed on its $750 million five-year unsecured credit facility (Baa3/BBB-), consisting of a $300 million revolver and a $450 million term loan, with both tranches priced at Libor plus 250 bps, according to an 8-K filed with the SEC on Thursday.

SunTrust Robinson Humphrey Inc., J.P. Morgan Securities LLC, Barclays Capital Inc., Goldman Sachs & Co. and Bank of America Merrill Lynch acted as the lead banks on the deal that was used to refinance existing debt.

Net leverage is around 2.3 times.

Omnicare is a Covington, Ky.-based pharmaceutical services company.

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