Harbor Freight breaks; Federal-Mogul rises; Provo Craft sets talk; Ardent floats guidance

By Sara Rosenberg

New York, Feb. 23 - Harbor Freight Tools' credit facility allocated and freed up for trading during Tuesday's market hours, with the term loan moving to par plus levels shortly after the break.

Also in trading, Federal-Mogul Corp.'s strip of bank debt gained some ground after the release of good earnings, and HealthSouth Corp. and NRG Energy Inc. moved around on the back of their numbers. Another company to report earnings was Orbitz Worldwide Inc., and its term loan B was unchanged to lower on the news.

In other loan happenings, Provo Craft came out with official price talk on its credit facility as the deal was launched to investors, Ardent Health Services LLC began circulating some guidance on its upcoming transaction and International Lease Finance Corp. (ILFC) revealed that it plans to come to market later this week with a new term loan.

Harbor Freight frees to trade

Harbor Freight Tools' credit facility broke for trading, with the $494 million term loan due in 2016 seen quoted above the original issue discount price at which it sold during syndication, according to traders.

The term loan was quoted by traders at par bid, par ½ offered in the afternoon. One trader remarked that the loan was seen at 99¾ bid, par ¼ offered on the break and then it inched its way higher.

Pricing on the term loan is Libor plus 325 basis points with a step-down to Libor plus 300 bps when leverage is 1.5 times or lower. There is a 1.75% Libor floor and the paper was sold at an original issue discount of 991/4.

During syndication, pricing was reverse flexed from Libor plus 350 bps with the addition of the step-down, and the Libor floor was reduced from 2%.

Harbor Freight lead bank

Harbor Freight's $534 million credit facility, which also includes a $40 million revolver due in 2015, is being led by Credit Suisse.

Financial covenants include a leverage ratio, an interest coverage ratio and capital expenditures limitations.

Amortization on the term loan is 1% per year with a bullet due at maturity.

Proceeds from the credit facility will be used to refinance existing debt.

Harbor Freight Tools is a Camarillo, Calif.-based tool and equipment catalog retailer.

Federal-Mogul strengthens

Federal-Mogul's strip of bank debt gained more than a point during the session after "pretty good" fourth-quarter numbers were announced that showed a year-over-year improvement in net income, according to a trader.

The strip of debt was quoted at 87¾ bid, 88¾ offered, up from previous levels of 86¼ bid, 86¾ offered, the trader said.

For the fourth quarter, Federal-Mogul showed net income of $43 million, or $0.43 per share, compared to a net loss of $530 million, or $5.36 per share, in the prior year.

Net sales for the quarter were $1.408 billion, compared to $1.319 billion in the fourth quarter of 2008.

Federal-Mogul EBITDA improves

Federal-Mogul's operational EBITDA for the fourth quarter was $170 million, up from $113 million in the previous year.

Cash flow for the quarter was $251 million, compared to $181 million in the 2008 fourth quarter.

"The strong and profitable fourth quarter shows the benefits of higher sales combined with significant operational improvements throughout the year," said Jose Maria Alapont, president and chief executive officer, in a news release.

"Our record $251 million cash flow is the result of increased profitability combined with effective working capital management and efficient capital investments," Alapont added.

Federal-Mogul is a Southfield, Mich.-based supplier of powertrain and safety technologies.

HealthSouth bounces around

HealthSouth's term loan debt was quoted weaker by some and stronger by others on Tuesday after the company came out with fourth-quarter earnings results, according to traders.

The extended term loan was quoted by one trader at 99¾ bid, par ¾ offered, down from par bid, 101 offered on Monday, and by a second trader at par bid, par ¾ offered, versus 99½ bid, par ½ offered on Monday.

The non-extended term loan was quoted by the first trader at 96¾ bid, 97½ offered, down from 97 bid, 98 offered, and by the second trader at 96¾ bid, 97¾ offered, down on the bid side from 97 bid, 97¾ offered.

For the fourth quarter, the company had net income of $38.6 million, or $0.35 per share, compared to net income of $181.9 million, or $1.81 per diluted share, in the previous year.

Consolidated net operating revenues were $486.2 million for the fourth quarter, compared to $460.8 million for the fourth quarter of 2008.

And, adjusted consolidated EBITDA for the quarter was $94.7 million, compared to $87.5 million in the prior year.

HealthSouth reduces debt

During 2009, HealthSouth reduced its total debt outstanding by approximately $151 million and increased its cash and cash equivalents by about $49 million.

As of Dec. 31, total debt outstanding approximated $1.7 billion, with no amounts drawn on the company's $400 million revolving credit facility.

Due to the company's debt reduction efforts and its higher adjusted consolidated EBITDA, its leverage ratio was 4.3 times as of Dec. 31, compared to 5.3 times as of Dec. 31, 2008.

The company said in its earnings release that it remains confident it can achieve its leverage ratio goal of 3.5 times to 4.0 times by the end of 2011.

HealthSouth provides guidance

Also on Tuesday, HealthSouth revealed 2010 guidance, including expected adjusted income from continuing operations in the range of $1.60 to $1.70 per diluted share, compared to $1.45 per share in 2009.

Adjusted consolidated EBITDA for 2010 is expected to be in the range of $397 million to $407 million, compared to $383 million for 2009.

HealthSouth is a Birmingham, Ala.-based provider of inpatient rehabilitative healthcare services.

NRG moves with numbers

NRG Energy's strip of institutional bank debt also saw some movement following the release of quarterly numbers, according to traders.

The strip of debt was quoted by one trader at 96½ bid, 97 offered, compared to 96¼ bid, 97¼ offered, and by a second trader at 96½ bid, 97½ offered, versus 96 5/8 bid, 97 1/8 offered.

For the fourth quarter, NRG Energy reported net income of $33 million, or $0.11 per diluted common share, compared to $271 million, or $0.97 per diluted common share, in the previous year's fourth quarter.

Revenues for the quarter were $2.141 billion, compared to $1.655 billion in the fourth quarter of 2008.

And, adjusted EBITDA for the quarter was $489 million versus $403 million in the comparable period in the prior year.

NRG anticipates paydown

In addition to scheduled debt amortization payments, in the first quarter of 2010, NRG Energy expects to offer its first-lien lenders 50% of the 2009 excess cash flow minus a $200 million prepayment made in December 2009.

This amount is anticipated to result in an additional payment of about $230 million, resulting in a total of roughly $430 million of debt reduction payments to the term loan B.

Total liquidity for the year ended Dec. 31, excluding counterparty collateral received, was $3.794 billion, a $430 million increase compared to $3.364 billion at the end of 2008.

NRG is a Princeton, N.J.-based owner and operator of diverse power generation portfolios.

Orbitz steady to weaker

Orbitz's term loan was unchanged to lower on the day, depending on which trader was asked, after the company announced what one trader described as "underwhelming numbers [and] guidance for Q1 [that] wasn't fantastic."

The term loan B was quoted by one trader at 94¾ bid, 95½ offered, unchanged from Monday's levels despite the earnings news, and by a second trader at 94¾ bid, 95¼ offered, down from 95 bid, 95½ offered.

For the fourth quarter, Orbitz had a net loss of $18 million, or $0.21 per diluted share, compared to net income of $8 million, or $0.10 per diluted share, in the prior year.

Net revenue for the quarter was $175 million, down 3% from $180 million in the 2008 fourth quarter.

Lastly, adjusted EBITDA for the quarter was $27 million, down 15% from $33 million in the previous year.

Orbitz first-quarter outlook

In addition, Orbitz said on Tuesday that for the first quarter of 2010, it expects to report a 2% to 6% year-over-year decline in net revenue, reflecting the removal of most domestic air booking fees and significant reduction of hotel booking fees in the second quarter of 2009.

The company anticipates 20% to 22% cost of revenue as a percentage of net revenue in the first quarter, reflecting lower net revenue per transaction as a result of the fee reductions as well as increased costs associated with higher transaction volume.

And, quarterly adjusted EBIDTA is expected to show a 0% to 10% year-over-year decrease.

Orbitz is a Chicago-based online travel company.

Provo Craft releases talk

Moving to the primary market, Provo Craft held a bank meeting on Tuesday to launch its credit facility into syndication, and in connection with the event, official price talk on the term loan was announced, according to a market source.

The $120 million term loan was presented to lenders with talk in the Libor plus 550 basis points area with a 2% Libor floor and an original issue discount in the 97 to 97½ context, the source said.

By comparison, prior to the bank meeting, unofficial guidance on the loan was floating around as Libor plus 500 bps with a 2% Libor floor and an original issue discount of 98.

Provo Craft getting revolver, too

Provo Craft's $170 million credit facility, which is being led by Bank of America, also includes a $50 million revolver.

Proceeds from the facility, along with $65 million of mezzanine debt, will be used to help fund the buyout of the company by BAML Capital Partners.

Senior leverage is around 2.3 times and total leverage is around 3.6 times.

Provo Craft is a Spanish Fork, Utah-based manufacturer and distributor of craft, hobby and education products.

Ardent guidance surfaces

Ardent Health Services began floating some price talk on its $475 million credit facility (B1/B) as the deal is getting ready to launch with a bank meeting on Wednesday, according to a market source.

The $400 million six-year term loan is being talked at Libor plus 400 bps, while the $75 million five-year revolver is being talked at Libor plus 375 bps, the source said.

Libor floor and original issue discount on the term loan are still to be determined, the source continued.

Bank of America, Barclays and GE Capital are the lead banks on the deal that will be used to refinance existing debt and fund a dividend.

Ardent Health is a Nashville, Tenn.-based operator of acute care hospitals and specialty care facilities.

ILFC sets launch

International Lease Finance has scheduled a bank meeting for Thursday with a 1:30 p.m. ET registration time and a 2 p.m. ET start time to launch a new $750 million senior secured term loan, according to a market source.

Price talk on the term loan is currently unavailable, the source said.

Bank of America and Goldman Sachs are the lead banks on the deal that will be used to repay a portion of the company's outstanding debt.

Security for he new term loan is a portfolio of selected aircraft and related leases.

International Lease Finance is a Los Angeles-based leaser and remarketer of advanced technology commercial jet aircraft to airlines. The company is a wholly owned subsidiary of American International Group Inc., a New York-based insurance and financial services firm.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.