Kinder Morgan, SafeNet, Central Parking break; LCDX active on first day; Claire's adds OID

By Sara Rosenberg

New York, May 22 - A big focus in the secondary market on Tuesday was Kinder Morgan Inc., as its credit facility freed up for trading, with the multi-billion dollar term loan B quoted in the mid to high par's.

But, Kinder wasn't the only deal to break. SafeNet Inc. also freed up, with its first-lien term loan wrapped around 101 and its second-lien term loan wrapped around 102, and Central Parking Corp. broke, with its strip of first-lien debt trading in the high par's and its second-lien debt trading in the 101s.

The other main focus of the secondary market Tuesday was the start of trading of the new LCDX index, with levels starting out the session in the lower par's and then moving into the upper par's.

Meanwhile, in the primary, Claire's Stores Inc. added an original issue discount to its term loan tranche.

Kinder Morgan's credit facility allocated and freed up for trading early on in the day, with the $3.3 billion seven-year term loan B quoted at par ½ bid, par ¾ offered, according to a trader.

The term loan B is priced at Libor plus 150 basis points with a step down to Libor plus 137.5 bps when leverage falls below 5.5 times.

During syndication, the term loan B was upsized from $2.3 billion, pricing firmed up at the tight end of original guidance of Libor plus 150 bps to 175 bps and the step down was added.

Kinder Morgan's $7.3 billion credit facility (Ba2/NA/BB) also includes a $2 billion three-year asset-sale bridge term loan C, a $1 billion six-year revolver and a $1 billion 61/2-year term loan A, with all of these tranches priced at Libor plus 137.5 bps.

During syndication, the term loan A was downsized from $2 billion when the term loan B was upsized, and pricing on the term loan A and the revolver was reverse flexed from original talk at launch of Libor plus 162.5 bps.

The term loan A and the revolver were syndicated in a club style to banks.

Citigroup, Goldman Sachs, Deutsche Bank, Wachovia and Merrill Lynch are the lead banks on the deal.

Proceeds will be used to help fund the company's public-to-private buyout by management and equity investors.

Under the acquisition, chairman and chief executive officer Richard D. Kinder and other members of management, including co-founder Bill Morgan, current board members Fayez Sarofim and Mike Morgan, and investment partners Goldman Sachs Capital Partners, American International Group, Inc., the Carlyle Group and Riverstone Holdings LLC will acquire all of the outstanding common stock of Kinder Morgan for $107.50 per share in cash.

All in all, the transaction is valued at about $22 billion, including the assumption of about $7 billion of debt.

Kinder Morgan is a Houston-based energy infrastructure provider.

SafeNet frees to trade

SafeNet's credit also hit the secondary market on Tuesday, with the $250 million seven-year first-lien term loan (B1/B) quoted at par ¾ bid, 101¼ offered and the $125 million eight-year second-lien term loan (Caa1/CCC+) quoted at 101½ bid, 102½ offered, according to a market source.

The first-lien term loan (B1/B) is priced at Libor plus 250 bps, and the second-lien term loan is priced at Libor plus 600 bps, with call protection of 102 in year one and 101 in year two.

SafeNet's $400 million credit facility also includes a $25 million six-year revolver (B1/B) priced at Libor plus 250 bps, with a 50 bps commitment fee.

Deutsche Bank and Citigroup are joint lead arrangers on the deal.

Proceeds will be used to help fund the already completed acquisition of SafeNet by Vector Capital in a transaction valued at about $634 million.

The acquisition consisted of a tender offer for all outstanding shares of SafeNet under which more than 83% of the outstanding shares were tendered.

SafeNet is a Belcamp, Md., developer, marketer and seller of hardware and software information security products and services.

Central Parking breaks

And yet another deal to free up was Central Parking, with its strip of first-lien term loan and synthetic letter-of-credit facility debt quoted at par ½ bid, par ¾ offered, and its second-lien term loan quoted at 101 bid, 101½ offered, according to a trader.

The $235 million seven-year first-lien term loan (Ba2/B) and the $55 million seven-year synthetic letter-of-credit facility (Ba2/B) are both priced at Libor plus 225 bps, with a step down to Libor plus 200 bps at B1 corporate credit ratings, and the $50 million 71/2-year second-lien term loan (B2/CCC+) is priced at Libor plus 450 bps, with 101 call protection for one year.

During syndication, the first-lien term loan was upsized from $225 million, pricing on the first-lien term loan and the synthetic letter-of-credit facility was flexed down from original talk of Libor plus 250 bps with the addition of the step, pricing on the second-lien term loan was flexed down from original guidance of Libor plus 550 bps to 600 bps, and call protection on the second-lien term loan was changed from 102 in year one and 101 in year two.

Central Parking's $420 million senior secured credit facility also includes an $80 million six-year revolver (Ba2/B) that is priced at Libor plus 225 bps.

During syndication, the revolver was upsized from $75 million and pricing was reduced from original talk at launch of Libor plus 250 bps.

Goldman Sachs acted as the lead bank on the deal.

Proceeds were used to help fund the leveraged buyout of Central Parking, which was completed on Tuesday, for $22.53 per share in cash by KCPC Holdings, Inc., a company formed by Kohlberg & Co., LLC, Lubert-Adler, LP and Chrysalis Capital Partners, LP, for this transaction.

Other leveraged buyout financing came from first mortgage and mezzanine financing from Greenwich Capital Financial Products, Inc. and Goldman Sachs Mortgage Co.

The $10 million of addition first-lien term loan funds that were raised through the upsizing reduced the cash portion used for the buyout.

Central Parking is a Nashville, Tenn., provider of parking and transportation-related services.

LCDX active and strong

In other secondary news, LCDX, an index with 100 equally weighted underlying single-name loan-only credit default swaps, began trading on Tuesday with levels starting off in the lower par context and then inching up to the higher par context, according to a trader.

The index was said to have experienced an enormous amount of trading during the day.

At the open, LCDX was quoted at par ¼ bid, par 3/8 offered. It then traded as high as par 3/4-plus before settling in around the par 5/8 bid, par 5/8-plus offered area, where it ended the session, the trader remarked.

The index was being launched by CDS IndexCo, a consortium of dealer banks active in the loan and credit default swap markets, and Markit.

Thirteen banks were markets at launch - Bank of America, Barclays Capital, Bear Stearns, BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan, Lehman Brothers, Merrill Lynch, Morgan Stanley and UBS.

The index consists of first-lien loans listed on the Markit Syndicated Secured List.

If an entity previously was on the Syndicated Secured List and was included in any given series of LCDX, but is removed due to the pay down of their syndicated secured loans (without being replaced by new syndicated secured loans), the entity's weighting in the index will be set to zero, and the index going forward from that point will trade with a factor.

Applicable credit events for the product will be failure to pay and bankruptcy.

It is expected that any credit events will be settled via a credit event auction similar to those used for unsecured CDS, with some customization for loan CDS.

Claire's sells term loan at discount

Moving to the primary market, Claire's Stores added an original issue discount of 99½ to its $1.45 billion seven-year term loan B, according to a market source.

Pricing on the term loan B was left unchanged at Libor plus 275 bps, the source added.

Claire's Stores' $1.65 billion senior secured credit facility (B1/B) also includes a $200 million six-year revolver that is priced at Libor plus 275 bps, with a 50 bps commitment fee.

Credit Suisse, Bear Stearns and Lehman Brothers are the lead banks on the deal, with Credit Suisse the left lead.

Proceeds will be used to help fund Apollo Management, LP's leveraged buyout of the company for $33.00 in cash per share, which represents a transaction value of $3.1 billion.

Other buyout financing is expected to come from $935 million in high-yield bonds and $600 million of equity.

The deal is leveraged 4.4 times through the credit facility and 7.2 times total.

Completion of the transaction is subject to customary closing conditions, including regulatory review and stockholder approval.

Claire's is a Pembroke Pines, Fla., specialty retailer offering costume jewelry and accessories.

Omnova closes

Omnova Solutions Inc. closed on its new $230 million credit facility consisting of a $150 million seven-year term loan B (B2/B+) priced at Libor plus 250 bps and an $80 million five-year ABL revolver priced at Libor plus 150 bps, according to a company news release.

During syndication, pricing on the term loan B was lowered from original talk at launch of Libor plus 275 bps.

Deutsche Bank was the bookrunner on the term loan B, and JPMorgan was the bookrunner on the ABL revolver.

Proceeds were used to help fund a cash tender offer for the company's $165 million of 11¼% secured notes due 2010.

Omnova is a Fairlawn, Ohio, provider of emulsion polymers and specialty chemicals and decorative and functional surfaces for various commercial, industrial and residential end uses.

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