Valeant regains some ground; PetSmart slides with dividend payment; GCA Services rises

By Sara Rosenberg

New York, Feb. 23 – Valeant Pharmaceuticals International Inc.’s term loan F partially rebounded in trading on Tuesday from losses suffered late in the previous session that stemmed from news of potential financial misstatements.

Also in the secondary market, PetSmart Inc.’s term loan was softer in reaction to chatter of a cash dividend payment, and GCA Services Group Inc.’s first-lien term loan strengthened from its recent breaking levels.

Meanwhile, in the primary market, Caliber Collision increased pricing on its add-on term loan, upsized its delayed-draw term loan and downsized its revolver, National Veterinary Associates (NVA Holdings Inc.) raised the size of its incremental term loan and set the original issue discount at the tight end of guidance, and Armstrong World Industries Inc. disclosed price talk on its term loan B with launch.

Valeant comes off lows

Valeant Pharmaceuticals’ term loan F moved to 94½ bid, 95½ offered on Tuesday after dropping as low as 91¾ bid, 92¾ offered late Monday with the company’s announcement of net revenues misstatements, according to a trader.

Prior to the news, on Monday, the loan was quoted at 95¼ bid, 96¼ offered, the trader added.

The Laval, Quebec-based specialty pharmaceutical company revealed in a late day release that it identified certain sales to Philidor during 2014, previous to its entry into an option to acquire Philidor, which should have been recognized when product was dispensed to patients rather than on delivery to Philidor.

Currently, the belief is that about $58 million of net revenues previously recognized in the second half of 2014 should not have been recognized upon delivery of product to Philidor. Correcting the misstatements is expected to reduce reported 2014 GAAP earnings per share by around $0.10 and increase 2015 GAAP earnings per share by about $0.09.

The company said it expects to delay filing its 2015 10-K pending completion of the review of related accounting matters, and the ongoing assessment of the impact on financial reporting and internal controls.

PetSmart weakens

PetSmart’s term loan dipped in trading with news that “they’re paying themselves a cash dividend” of $800 million, a trader said.

Following the news, the term loan was quoted at 96 bid, 97 offered, down from 96¾ bid, 97¾ offered, the trader added.

PetSmart is a Phoenix-based specialty pet retailer.

GCA moves higher

GCA Services Group’s $515 million seven-year covenant-light first-lien term loan (B1/B) was seen at 99¼ bid, 100¼ offered in the morning after freeing up for trading late in the previous session at 98½ bid, 99½ offered, a trader remarked.

Pricing on the first-lien term loan is Libor plus 475 basis points with a 1% Libor floor, and it was sold at an original issue discount of 98. The debt has 101 soft call protection for one year.

During syndication, the discount on the term loan firmed at the wide end of the 98 to 98.5 talk, the call protection was extended from six months, the free and clear allowance under the incremental was reduced to $75 million from $110 million, the MFN sunset was terminated and the restricted payments basket was modified.

The company’s $795 million credit facility also includes a $100 million five-year revolver (B1/B) and a $180 million pre-placed eight-year second-lien term loan (Caa1/CCC+).

GCA being acquired

Proceeds from GCA’s credit facility will be used to help fund its buyout by the Merchant Banking Division of Goldman Sachs and Thomas H. Lee Partners LP from Blackstone.

Goldman Sachs Bank USA, Barclays, UBS AG, ING and Macquarie Capital (USA) Inc. are leading the debt.

Closing on the buyout is expected this quarter, subject to customary conditions.

GCA is a Cleveland-based provider of facility services, including janitorial/custodial services, contamination control for cleanroom manufacturing, facilities operations and maintenance services, grounds and athletic field management services, and diversified staffing.

Caliber reworks deal

Switching to the primary market, Caliber Collision raised pricing on its $111 million add-on term loan due November 2019 to Libor plus 525 bps with a step-down to Libor plus 500 bps based on leverage, from Libor plus 475 bps with a leverage-based step-up to Libor plus 500 bps, according to a market source, who said the 1% Libor floor and original issue discount of 99 were unchanged.

In connection with the add-on, the company’s existing term loan is also getting pricing of Libor plus 525 bps with a step-down to Libor plus 500 bps based on leverage and a 1% Libor floor, and all $685 million of term loan debt, which includes the add-on amount, will get 101 soft call protection for one year.

Another change announced was that the company lifted its delayed-draw term loan to $125 million from $100 million and cut its revolver to $50 million from $75 million, the source added.

Antares Capital is leading the deal that will be used to fund acquisitions.

Caliber Collision, an OMERS Private Equity portfolio company, is a Lewisville, Texas-based operator of automotive collision repair centers.

National Veterinary revised

National Veterinary Associates upsized its incremental term loan to $115 million from $100 million and set the original issue discount at 97.5, the tight end of the 97 to 97.5 talk, a market source said.

The term loan is still priced at Libor plus 450 bps with a 1% Libor floor, and has 101 soft call protection for one year.

Commitments were due at 1:30 p.m. ET on Tuesday, the source added.

Bank of America Merrill Lynch, Jefferies Finance LLC and Nomura are leading the deal that will be used for acquisition financing, for general corporate purposes and to pay down revolver drawings.

National Veterinary Associates is an Agoura Hills, Calif.-based owner of independent freestanding veterinary hospitals.

Armstrong talk surfaces

In more primary happenings, Armstrong World Industries held its lender call on Tuesday, launching its $250 million seven-year term loan B with talk of Libor plus 325 bps with a 0.75% Libor floor and an original issue discount of 99 to 99.5, according to a market source.

Commitments for the term loan B are due at noon ET on March 1, the source continued.

The company’s $1.05 billion credit facility (B1/BB+) also includes a $200 million revolver and a $600 million term loan A.

Bank of America Merrill Lynch is leading the deal that will be used to refinance an existing credit facility in connection with the separation of the company’s flooring business, Armstrong Flooring Inc.

Armstrong is a Lancaster, Pa.-based designer and manufacturer of floors and ceiling systems. Armstrong Flooring is a Lancaster, Pa.-based producer of flooring products.

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