Micro Focus, Flavors Holdings, AVG Technologies, Callon break; Albertson’s tweaks add-on

By Sara Rosenberg

New York, Oct. 7 – Micro Focus’ credit facility hit the secondary market on Tuesday with both the term loan B and term loan C quoted above their original issue discounts, and Flavors Holdings Inc., AVG Technologies NV and Callon Petroleum Co. freed up as well.

Moving to the primary, Albertson’s Holdings LLC (Safeway Acquisition Merger Sub Inc.) lifted the size of its add-on term loan B-4 and tightened the original issue discount, Schaeffler (INA Beteiligungsgesellschaft GmbH) and Pro Mach Inc. came out with price talk on their deals with launch, while SourceHOV LLC timing and structure surfaced.

Micro Focus frees up

Micro Focus’ credit facility began trading on Tuesday with both the $1,275,000,000 seven-year covenant-light term loan B quoted at 95¾ bid, 96½ offered and the $500 million five-year covenant-light term loan C quoted at 95½ bid, according to a trader.

Pricing on the term loan B is Libor plus 425 basis points with a 1% Libor floor and it was sold at an original issue discount of 95½. There is 101 soft call protection for one year and amortization of 1% per annum.

The term loan C is priced at Libor plus 375 bps with a 0.75% Libor floor and was issued at 95. This tranche has 101 soft call protection for one year and amortization of 10% per annum.

During syndication, the term loan was downsized from $1.35 billion, pricing was flexed up from Libor plus 325 bps and the discount moved from revised talk of 97½ and initial talk of 99, and pricing on the term loan C was increased from Libor plus 300 bps, the pricing step-downs were removed and the discount widened from revised talk of 97 and initial talk of 99½.

Also during syndication, the call protection on both term loans was extended from six months, the 18-month MFN sunset provision was eliminated, and the accordion and excess cash flow sweep were modified.

Micro Focus getting revolver

Along with the term loans, Micro Focus’ $2 billion senior secured credit facility (B1/BB-) includes a $225 million five-year revolver that was upsized from $150 million when the term loan B was downsized.

Bank of America Merrill Lynch, HSBC Securities (USA) Inc., RBC Capital Markets LLC, Goldman Sachs Bank USA, Credit Suisse Securities (USA) LLC and Guggenheim are leading the deal.

Proceeds from the credit facility will be used to help fund the company’s merger with the Attachmate Group in which Micro Focus will acquire the entire issued share capital of Attachmate, in exchange for the issue of about 86.6 million ordinary shares to Attachmate’s parent company, Wizard Parent LLC. The enterprise value of the transaction is $2,349,800,000 before costs.

Closing on the merger is expected on Nov. 3, subject to customary conditions, including Micro Focus shareholder approvals and regulatory approvals under the Hart-Scott-Rodino Act.

Micro Focus is a software provider with U.S. headquarters in Rockville, Md., and U.K. headquarters in Newbury, Berkshire. Attachmate, currently owned by Francisco Partners, Golden Gate Capital, Elliott Management and Thoma Bravo, is a Houston-based software holding company.

Flavors hits secondary

Flavors Holdings’ credit facility also broke for trading, with both the $350 million 5½-year first-lien term loan and the $50 million seven-year second-lien term loan seen at 96 bid, 97 offered, a market source remarked.

The first-lien term loan is priced at Libor plus 575 bps with a 1% Libor floor and was sold at an original issue discount of 96. There is 101 soft call protection for one year.

Pricing on the second-lien term loan is Libor plus 1,000 bps with a 1% Libor floor and it was issued at 96. This loan is non-callable for one year, then at 103 in year two, 102 in year three and 101 in year four.

During syndication, the first-lien term loan was downsized from $365 million, pricing was raised from Libor plus 550 bps, the discount was changed from 99, the maturity was shortened from six years and amortization was increased to 5% from 1%, the second-lien term loan was downsized from $75 million, the spread was lifted from Libor plus 950 bps, the discount was revised from 98½, and the call protection was modified from 103 in year one, 102 in year two and 101 in year three, and the excess cash flow sweep was changed to 75% with step-downs from 50% with step-downs.

Flavors lead banks

Credit Suisse Securities (USA) LLC, Jefferies Finance LLC, Deutsche Bank Securities Inc. and PNC Capital Markets are leading Flavors Holdings’ $450 million credit facility, which also includes a $50 million revolver.

Proceeds will be used to fund the recently completed acquisition of Merisant Co., a producer of low-calorie tabletop sweeteners, by Flavors’ subsidiary, Mafco Worldwide, a Camden, N.J.-based manufacturer of licorice extract and related derivatives for use as flavoring and moistening agents.

To compensate for the reduction in term loan debt, the cash equity for the transaction was raised to $60 million from $35 million and the drawn revolver amount was lifted to $21 million from $15million.

First-lien net leverage is 3.8 times, and total net leverage is 4.3 times.

Flavors is a provider of flavoring and sweetening products and services.

AVG starts trading

AVG Technologies’ credit facility freed up too, with the $200 million six-year term loan B quoted at 98 bid, 98½ offered, a trader said.

Pricing on the B loan is Libor plus 475 bps with a 1% Libor floor and it was sold at an original issue discount of 98, after firming at the wide end of revised talk of Libor plus 450 bps to 475 bps with a 1% Libor floor and a discount of 98 to 98½. There is 101 soft call protection for one year.

Previously in syndication, the loan was downsized from $250 million, the spread was increased from Libor plus 375 bps, the discount widened from 99 and the call protection was extended from six months.

The company’s $250 million senior secured credit facility also includes a $50 million five-year revolver.

Morgan Stanley Senior Funding Inc. and HSBC Securities USA Inc. are leading the deal.

AVG buying Location

Proceeds from AVG’s credit facility will be used to help fund the acquisition of Location Labs, an Emeryville, Calif.-based mobile security company, for about $140 million initially, plus up to roughly $80 million in cash consideration over the next two years, and for general corporate purposes, including future potential acquisitions.

The recent term loan B downsizing is resulting in less cash being put on the balance sheet.

Closing is expected in the fourth quarter.

AVG is an online security company with headquarters in Amsterdam and San Francisco.

Callon breaks

Callon Petroleum’s $275 million second-lien term loan emerged in the secondary as well, with levels quoted at 99 bid, par offered, according to a trader.

Pricing on the loan is Libor plus 750 bps with a 1% Libor floor and it was issued at a discount of 98. The debt is non-callable for one year, then at 102 in year two and 101 in year three.

During syndication, pricing on the term loan was revised from talk of Libor plus 675 bps to 700 bps, the original issue discount widened from 99, the call protection was changed from 102 in year one and 101 in year two, and a leverage covenant was added.

J.P. Morgan Securities LLC and Citigroup Global Markets Inc. are leading the deal that will be used with proceeds from a common stock sale to fund the $212.6 million acquisition of certain undeveloped acreage and oil and gas producing properties located in Midland, Andrews, Martin and Ector counties in Texas, to refinance an existing second-lien term loan and to pay down revolving credit facility borrowings.

Callon, a Natchez, Miss.-based energy company, is expected to have pro forma debt to EBITDA of around 2.6 times.

Albertson’s changes emerge

Switching to the primary, Albertson’s Holdings upsized its add-on first-lien covenant-light term loan B-4 due August 2021 to $300 million from $250 million and moved the original issue discount to 99½ from 99, according to a market source.

The add-on is still priced at Libor plus 450 bps with a 1% Libor floor and has 101 soft call protection through August 2015, which all matches the existing term loan B-4.

Commitments continued to be due at 3 p.m. ET on Tuesday.

Credit Suisse Securities (USA) LLC, Bank of America Merrill Lynch, Citigroup Global Markets Inc., Morgan Stanley Senior Funding Inc., Barclays, Deutsche Bank Securities Inc., PNC Capital Markets LLC, US Bank and SunTrust Robinson Humphrey Inc. are leading the deal that will help fund the acquisition of Safeway Inc.

Other funds for the transaction, which is subject to Safeway shareholder and regulatory approvals, will come from a bond offering that was downsized due to the add-on term loan B-4.

Albertson’s is a Spokane, Wash.-based supermarket chain. Safeway is a Pleasanton, Calif.-based food and drug retailer.

Schaeffler sets guidance

Schaeffler held its call on Tuesday, launching its €1.8 billion equivalent term loan B (Ba2) due May 15, 2020 with talk of Libor/Euribor plus 325 bps to 350 bps with a 0.75% floor, an original issue discount of 99½ and 101 soft call protection for six months, a market source remarked.

The loan will have euro and U.S. dollar tranches with the breakdown still to be determined.

Commitments are due at noon ET on Oct. 15, the source added.

Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and HSBC Securities are the global coordinators on the deal, with Citigroup the left lead on the U.S. debt and Deutsche the left lead on the euro debt. Other bookrunners include Commerzbank, J.P. Morgan Securities LLC and UniCredit.

Schaeffler, a Herzogenaurach, Germany-based manufacturer of bearings for autos and industrial OEMs, will use the new term loan to refinance existing term debt.

Pro Mach discloses talk

Pro Mach came out with talk of Libor plus 425 bps to 450 bps with a 1% Libor floor, an original issue discount of 99 and 101 soft call protection for six months on $405 million seven-year covenant-light first-lien term loan that launched with a bank meeting during the session, according to a market source.

The company’s $465 million credit facility (B2/B-) also includes a $60 million five-year revolver.

Commitments are due on Oct. 16, the source said.

Goldman Sachs Bank USA and GE Capital Markets are leading the deal that will be used with $225 million of eight-year second-lien mezzanine notes to fund the buyout of the company by AEA Investors LP from the Jordan Co.

Closing is expected in the fourth quarter, subject to customary conditions.

Pro Mach is a Loveland, Ohio-based provider of integrated packaging and processing products and services for food, beverage, consumer goods, pharmaceutical and other diverse companies.

SourceHOV timing, structure

SourceHOV set a bank meeting for 2:30 p.m. ET in New York on Thursday to launch its $1,105,000,000 senior credit facility, and the breakdown of the deal surfaced as a $75 million revolver, a $780 million first-lien term loan and a $250 million second-lien term loan, a market source said.

Morgan Stanley Senior Funding Inc. is leading the credit facility that is being done in connection with the company’s acquisition of BancTec Group.

Proceeds will be used to refinance existing debt, redeem certain existing SourceHOV equity holders and provide additional working capital.

Also, as part of the transaction, stockholders of BancTec will receive stock in SourceHOV.

Closing is expected this year, subject to customary conditions, including regulatory approvals.

SourceHOV and BancTec are Dallas-based providers of transaction processing services.

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