Pinnacle tightens discount; TASC tweaks pricing; MEG, Targa, Wrigley price talk emerges

By Sara Rosenberg

New York, Dec. 8 - Pinnacle Foods Group LLC lowered the original issue discount on its incremental term loan C due to strong demand, and TASC Inc. revised spreads and discounts on its multiply oversubscribed credit facility.

In more primary happenings, MEG Energy Corp., Targa Resources Inc. and Wm. Wrigley Jr. Co. came out with price talk on their credit facilities as the deals were presented to investors during Tuesday's market hours.

And, in the secondary market, Freescale Semiconductor Holdings I Ltd.'s bank debt moved around as the company's amendment proposal was not approved by the necessary amount of lenders.

Pinnacle Foods reduces OID

Pinnacle Foods changed the original issue discount on its $850 million incremental term loan C (B2) to 99 from 98 as the deal has been well-received by investors, according to a market source.

Pricing on the term loan C was left unchanged at Libor plus 500 basis points with a 2.5% Libor floor, the source added.

Commitments toward the revised deal were due at the end of the day Tuesday.

The term loan C was initially expected to be sized at $875 million, based on the company's commitment letter. It was then revised to $750 million, and it was revised again to $850 million because of the strong demand.

As a result, the company's senior unsecured bond offering, which was first expected to be sized at $275 million, was changed to $400 million when the term loan C was $750 million and, now with the latest term loan size, has been revised to $300 million.

Pinnacle Foods getting revolver add-on

In addition to the term loan C, Pinnacle Foods is getting a $20 million incremental revolver (B2), which is not being syndicated and will be used for general corporate purposes and working capital. The revolver add-on will be priced in line with the existing revolver.

Maturity dates on the incremental debt will match those of the company's existing debt.

Barclays, Bank of America and Credit Suisse are the joint lead arrangers and bookrunners on the credit facility, with Barclays the left lead. HSBC and Macquarie Capital are bookrunners as well.

Proceeds from the term loan C, the bonds and equity will be used by Pinnacle Foods to fund the acquisition of Birds Eye Foods Inc. from Vestar Capital Partners, Pro-Fac Cooperative and management in a transaction valued at $1.3 billion.

Pro forma for the acquisition, including expected synergies of $45 million, the company will have senior secured leverage of 4.4 times, senior leverage of 5.7 times and total leverage of 6.2 times based on pro forma adjusted EBITDA of about $472 million for the 12 months ended Sept. 27.

Pinnacle Foods is a Cherry Hill, N.J.-based manufacturer and distributor of branded packaged foods. Birds Eye is a Rochester, N.Y.-based packaged food company with more than $930 million of total sales.

TASC lowers pricing

TASC announced some changes to its well-oversubscribed credit facility on Tuesday, including reducing spreads on all tranches and the original issue discount on the term loans, according to a market source.

Under the revisions, the $390 million term loan B is now priced at Libor plus 375 bps with an original issue discount of 99, compared to initial talk of Libor plus 400 bps with a discount of 981/2, the source said.

The $200 million term loan A is now priced at Libor plus 350 bps with an original issue discount of 99, compared to initial talk of Libor plus 375 with a discount of 981/2, the source continued.

And, the $100 million revolver is now priced at Libor plus 350 bps, down from initial talk of Libor plus 375 bps, but the original issue discount was left unchanged at 98, the source added.

The 2% Libor floor on all tranches was left intact.

Recommitments are due at noon ET on Wednesday.

TASC being bought

Proceeds from TASC's credit facility will be used to help fund the purchase of the company by an investor group led by General Atlantic LLC and Kohlberg Kravis Roberts & Co. from Northrop Grumman Corp. in a transaction valued at $1.65 billion.

Other financing for the buyout will come from $310 million of senior subordinated notes (mezzanine debt) that has been pre-placed. KKR Capital Markets arranged the mezzanine financing, and Highbridge Mezzanine Partners is the lead investor.

Originally it was thought that the company would only get a total of $580 million of term loan debt, but the amount was upsized by $10 million prior to the deal's Nov. 20 bank meeting.

Barclays Capital, Deutsche Bank Securities and RBC Capital Markets are the lead banks on the $690 million senior secured credit facility (Ba2/BB), with Barclays the left lead. In addition, CPPIB Credit Investments Inc. has provided commitments toward the facility as an investor.

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

TASC is a Chantilly, Va.-based provider of advanced systems engineering and technical assistance to the defense, intelligence, federal, state and local markets.

MEG guidance surfaces

MEG Energy held a "very well-attended" bank meeting on Tuesday to launch its new $450 million credit facility (B2/BB+) and amendment and extension of its term loans, and with the launch, price talk was revealed, according to a market source.

The new $150 million revolving credit facility due in January 2013, new $300 million term loan due in April 2016 and extended term loans were presented with talk of Libor plus 400 bps, the source said.

The company is looking to extend the maturities on about $750 million of existing term loan debt to April 2016. As of now, most of the term loan debt matures in 2013 and a small piece matures in 2014.

Pricing on the existing term loans is currently Libor plus 200 bps.

MEG OIDs

MEG Energy's new term loan is being offered with an original issue discount of 98½ and a 2% Libor floor, the source remarked.

In addition, the new revolver is being offered at a discount of 98 with no Libor floor.

The extended term loans also have a 2% Libor floor and are being offered with 75 bps of fees, comprised of a 60 bps extension fee and a 15 bps amendment fee, the source added.

Barclays and Credit Suisse are the joint bookrunners on the deal that will be used for future expenditures and continued development.

MEG Energy is a Calgary, Alta.-based oil sands development company.

Targa price talk

Also holding a bank meeting on Tuesday was Targa Resources, and it too released price talk on its senior secured credit facility in connection with the launch.

According to a company presentation, both the $150 million 41/2-year revolver and the $550 million 61/2-year term loan B are being talked at Libor plus 400 bps to 425 bps.

The term loan B has a 2% Libor floor and is being offered at an original issue discount of 98½ to 99, a market source told Prospect News.

The revolver has a 75 bps unused fee.

Deutsche Bank, Credit Suisse and Citadel are the leads on the $700 million deal.

Targa refinancing debt

Proceeds from Targa's credit facility will be used to refinance its $250 million 8½% senior unsecured notes due 2013, its existing senior secured term loan due 2012 and a portion of Targa Resources Investments Inc.'s holdco loan due 2015.

The new facility will replace the company's existing $250 million senior secured revolver and $50 million senior secured synthetic letter-of-credit facility.

The pro forma capital structure will result in lower net leverage at Targa and the holdco of 4.4 times versus 4.8 times, lower consolidated leverage of 4.1 times versus 4.2 times, and lower stand-alone net leverage of 3.1 times.

Interest coverage is 4.3 times.

In addition, the transaction eliminates maturities in 2012 and 2013, takes a significant step toward eliminating the holdco loan, and increases operational and financial flexibility, the company presentation said.

Targa covenants

Covenants under Targa's proposed credit facility include maximum total leverage of 5.75 times in 2010 and 2011, stepping down to 5.50 times in 2012 and 5.25 times in 2013 and thereafter, and a minimum interest coverage ratio of 1.50 times.

There is a $75 million accordion feature if total leverage is less than 3.75 times and any incremental term loan must be used to repurchase the holdco loan. Incremental loans are subject to 50 bps MFN.

The facility requires mandatory prepayments with 100% of net cash proceeds from debt issuances, 100% of net cash proceeds from asset sales if leverage is greater than 4.25 times, stepping down to 75% and 50% based on leverage, and 50% of excess cash flow for any fiscal year, stepping down to 25% and 0% based on leverage.

Commitments toward the credit facility are due on Dec. 16 with closing targeted for late this month.

Targa is a Houston-based provider of midstream natural gas and natural gas liquid.

Wrigley launches term loans

Yet another deal to launch during the session was Wm. Wrigley's $2.1 billion in new term loans, according to a market source.

The new debt is comprised of a $1 billion three-year term loan talked at Libor plus 275 bps with an original issue discount of 99½ and a $1.1 billion five-year term loan talked at Libor plus 300 bps with an original issue discount of 991/4, the source said.

Both term loans have 101 soft call protection for one year.

Proceeds from the new term loans, along with new unsecured notes and cash on hand, will be used to refinance existing term loan B borrowings.

Wrigley seeks amendment

In addition to the new term loans, Wm. Wrigley also launched an amendment to its existing credit facility during its Tuesday conference call.

Under the amendment, the company is asking permission to get $1 billion in unsecured notes and the new term loans.

Also, the amendment would allow for the refinancing of the existing revolver and term loan A, and the new term loans at a later date with pari passu bonds or unsecured bonds or loans.

Lenders are being offered a 5 bps amendment fee.

Commitments toward the new loans and consents for the amendment are due on Dec. 15.

JPMorgan and Goldman Sachs are the lead arrangers on the deal, with JPMorgan running the amendment process.

Wm. Wrigley is a Chicago-based confections company.

ATI OID guidance

ATI Holding Co.'s $165 million term loan is being talked with an original issue discount in the 97 to 98 context, according to a market source.

Spread guidance on the term loan is Libor plus 500 bps with a 2.25% Libor floor.

The company's $200 million senior secured credit facility (B1) also includes a $35 million revolver.

Goldman Sachs is the lead bank on the deal that will be used, along with $65 million of mezzanine debt, to help fund the buyout of the company by BC Partners from the Riverside Co. and Primus Capital.

Commitments are due from lenders on Wednesday.

ATI is a Dallas-based operator of career training centers.

Freescale moves around

Switching to trading news, Freescale Semiconductor's old term loan was higher and its new term loan was lower as its amendment proposal failed to get lender approval by the Monday consent deadline, according to traders.

The old term loan was quoted by traders at 87¼ bid, 88¼ offered, up from 87 bid, 88 offered, while the new term loan was quoted by one trader at 104 bid, 105 offered, down a quarter of a point on the day, and by a second trader at 102 bid, down from 104 bid, 105 offered.

Under the amendment proposal, the company was looking for permission to issue secured and unsecured debt that would be used to reduce the term loan dollar-for-dollar, and for the ability to amend and extend its credit facility at a later date.

Lenders were being offered a 7½ bps amendment fee.

Citigroup was leading the amendment.

Freescale is an Austin, Texas-based designer and manufacturer of embedded semiconductors for the automotive, consumer, industrial and networking markets.

Princeton Review closes

In other happenings, The Princeton Review Inc. closed on its $96 million senior secured credit facility consisting of a $15 million revolver and an $81 million term loan.

Both tranches are priced at Libor plus 600 bps with a 2% Libor floor, and were sold at an original issue discount of 97.

GE Capital acted as the lead bank on the deal that was used to help fund the company's acquisition of Penn Foster Education Group Inc. from the Wicks Group of Cos. LLC for $170 million in cash.

Princeton Review is a Framingham, Mass.-based provider of college and graduate school test preparation and private tutoring. Penn Foster is a Scranton, Pa.-based provider of online education.

Nalco closes

Nalco Holding Co. closed on its $300 million term loan add-on (BB+), according to an 8-K filed with the Securities and Exchange Commission on Tuesday.

The add-on is priced at Libor plus 175 bps and was issued at an original issue discount of 91. Pricing came at the tight end of initial talk of Libor plus 175 bps to 200 bps with a discount of 90 to 91.

Deutsche Bank and Bank of America acted as the joint lead arrangers on the deal that was completed on Monday. Those two banks plus Citigroup were the bookrunners.

Proceeds are being used to redeem the company's 7¾% senior notes due 2011.

Nalco is a Naperville, Ill.-based provider of water treatment and process improvement products and services.

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