ON Semiconductor frees up; Sears flexes lower, firms issue price; Huntsman on deck

By Sara Rosenberg

New York, March 17 – ON Semiconductor Corp.’s credit facility broke for trading during Thursday’s market hours, with the term loan B quoted above its original issue discount.

Moving to the primary market, Sears Holdings Corp. lowered pricing on its incremental term loan and finalized the original issue discount at the tight end of guidance, and Huntsman International LLC joined this week’s calendar with a refinancing transaction.

ON Semiconductor breaks

ON Semiconductor’s credit facility began trading on Thursday, with the $2.2 billion seven-year covenant-light term loan B quoted at 99¼ bid, 99¾ offered, according to a market source.

Pricing on the term loan B is Libor plus 450 basis points with a 0.75% Libor floor, and it was sold at an original issue discount of 98.5. The debt includes 101 soft call protection for one year.

The company’s $2.8 billion credit facility (Ba1) also provides for a $600 million five-year revolver.

During syndication, the term loan B was upsized from $2 billion, the discount was revised from 98, the call protection was extended from six months and the MFN sunset was eliminated so that the debt has 50 bps MFN for life. Also, the revolver was upsized from $400 million.

ON Semiconductor leads

Deutsche Bank Securities Inc., Bank of America Merrill Lynch, BMO Capital Markets, HSBC Securities (USA) Inc. and SMBC are the bookrunners on ON Semiconductor’s credit facility.

Proceeds will be used to fund the acquisition of Fairchild Semiconductor International Inc. for $20.00 per share in an all-cash transaction valued at about $2.4 billion.

Due to the recent term loan B upsizing and the decision to draw $200 million under the revolver, the company cancelled plans for a $400 million senior unsecured notes offering.

Closing on the acquisition is expected in the second quarter, but the term loan will fund into escrow no later than 31 days following allocation and the original issue discount will be earned at funding into escrow.

Pro forma net leverage is 3.2 times including synergies.

ON Semiconductor is a Phoenix-based semiconductor company. Fairchild Semiconductor is a San Jose, Calif.-based semiconductor company.

Sears updates pricing

Sears trimmed pricing on its $750 million incremental senior secured ABL term loan (B) due July 20, 2020 to Libor plus 750 bps from Libor plus 800 bps and set the original issue discount at 97, the tight end of the 96 to 97 talk, according to a market source.

As before, the term loan has a 1% Libor floor and hard call protection of 102 in year one and 101 in year two.

Recommitments were due at 5 p.m. ET on Thursday, allocations are targeted for Friday and closing is expected on April 8, the source said.

Bank of America Merrill Lynch and Wells Fargo Securities LLC are leading the loan that will be used to reduce borrowings under the company’s asset-based revolver.

The borrowers are Sears Roebuck Acceptance Corp. and Kmart Corp.

Sears is a Hoffman Estates, Ill.-based retailer.

Huntsman coming soon

Huntsman set a lender call for 10 a.m. ET on Friday to launch a $550 million senior secured term loan B due in 2023, according to a market source.

Citigroup Global Markets Inc. is leading the deal that will be used to refinance a term loan B due in 2017 and a term loan C due in 2016.

Huntsman is a The Woodlands, Texas-based manufacturer and marketer of differentiated chemicals.

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