Endurance breaks; Airlines under pressure; Kinetic, Tensar, Total Safety ready deals

By Sara Rosenberg

New York, Oct. 3 - Endurance International Group's credit facility allocated and freed up for trading late in the day on Monday, with the term loan B quoted above its original issue discount price, which firmed at the tight end of revised talk.

Also in the secondary, airline names, including Delta Air Lines Inc., United Air Lines Inc. and US Airways Group Inc., were softer during Monday's trading session as rumors that AMR Corp. may be facing bankruptcy swirled through the market.

Furthermore, Chrysler Group LLC's term loan headed lower despite the release of positive monthly sales results since the overall tone was weaker - with some sources placing the market down by anywhere from a quarter to three quarters of a point.

Moving to the primary market, Kinetic Concepts Inc. revealed timing on the U.S. launch of its credit facility, and Tensar International Corp. Inc., Total Safety and AGCO emerged with new deal plans.

Endurance starts trading

Endurance International's credit facility hit the secondary market on Monday, with the $305 million five-year first-lien term loan B quoted at 96¼ bid, 97 offered, according to a market source.

Pricing on the term loan B is Libor plus 650 basis points with a 1.5% Libor floor, and it was sold at an original issue discount of 96. There is soft call protection of 102 in year one and 101 in year two.

At launch, the loan was talked at Libor plus 625 bps to 650 bps with a 1.5% floor and a discount of 96. Talk then moved to Libor plus 650 bps with a 1.5% floor and a discount of 95½ to 96, before settling in at the final level. Also during syndication, the maturity on the term loan B was shortened from six years.

Morgan Stanley & Co. LLC and Jefferies & Co. are the joint bookrunners on the $340 million credit facility (B2/B), which also includes a $35 million three-year revolver and will be used to refinance existing debt and for general corporate purposes.

Endurance is a Burlington, Mass.-based provider of online services to small- and medium-sized businesses.

Airline names retreat

Delta Air Lines, United Air Lines and US Airways were all down in trading as the airline sector came under scrutiny following chatter that AMR, a Fort Worth, Texas-based airline company, could be moving towards bankruptcy, according to traders.

Another factor seen by traders as a possible impetus for the negative performance in these names was the general market weakness.

Atlanta-based Delta saw its new term loan B quoted at 92 bid, 93½ offered, down from 93½ bid, 95 offered, its 2016 revolver quoted at 79 bid, 81 offered, down from 80 bid, 82 offered, and its equipment term loan quoted at 94 bid, 95 offered, down from 95 bid, 97 offered, traders said.

Chicago-based United Air Lines saw its term loan quoted at 93½ bid, 95 offered, down from 94½ bid, 96 offered, traders continued.

And, Tempe Ariz.-based US Airways saw its term loan quoted at 83 bid, 84 offered, down from 84½ bid, 85½ offered.

Chrysler trades down

In more secondary news, Chrysler released numbers for September that brought it to 18 consecutive months of year-over-year sales growth, but its term loan B was weaker in sympathy with the rest of the market, according to traders.

One trader had the B loan quoted at 86 bid, 87 offered, down from 86¾ bid, 87¾ offered on Friday, a second trader had it at 86 bid, 87 offered, down from 87 bid, 88 offered, and a third trader quoted it at 85½ bid, 86½ offered, down from Monday's opening levels of 86½ bid, 87½ offered.

"It's a very volatile name. Moves with the market," the first trader remarked.

For September, Chrysler, an Auburn Hills, Mich.-based producer of vehicles and products, reported U.S. sales of 127,334, up 27% from 100,077 in the same period last year. The company said the rise was driven by retail sales that were up 50%.

Specifically for the month, total car sales were 33,217, up 12% from 29,550 in September 2010, and total tuck sales were 94,117, up 33% from 70,527 last year.

Kinetic discloses U.S. timing

Switching to the primary, Kinetic Concepts emerged with plans to hold a bank meeting on Wednesday in New York to launch its proposed $2.8 billion senior secured deal (Ba3/BB-) to U.S. investors, while European guys already had their bank meeting in London on Monday, according to a market source.

As expected, based on the company's filings with the Securities and Exchange Commission, the facility consists of a $200 million five-year revolver and a $2.6 billion seven-year term loan, the source said, adding that price talk is not yet available.

Lead arrangers and bookrunners on the deal are Bank of America Merrill Lynch, Morgan Stanley & Co. Inc., Credit Suisse Securities (USA) LLC and RBC Capital Markets LLC, and UBS Securities LLC is a co-manager.

Proceeds will be used to help fund the purchase of the company by Apax Partners, Canada Pension Plan Investment Board and the Public Sector Pension Investment Board for $68.50 per share in cash in a transaction valued at $6.3 billion, including outstanding debt.

Kinetic plans notes

In addition to the credit facility, Kinetic Concepts, a San Antonio-based medical technology company, expects to issue $2.15 billion of bonds and use $1.75 billion of equity for its buyout.

Backing the notes is a commitment for a $900 million senior unsecured bridge loan and a $1.25 billion senior secured second-lien bridge loan, with a portion of the second-lien bridge loan possibly available in euros - and syndication of these bridge loans is currently taking place.

It was originally thought that the bridge loans would launch is August, but filing of the company's proxy got delayed until Aug. 8, the day that the market fell hundreds of points, and, as a result, the decision was made to move the launch to September.

Closing on the transaction is expected in the second half of this year, subject to certain conditions, including shareholder approval, which will be sought at a special meeting on Oct. 28, and regulatory approval. It is not subject to financing.

Tensar coming soon

Also announced for a Wednesday morning bank meeting was Tensar International, with the company coming to market with a $325 million credit facility, according to a market source.

The facility consists of a $25 million four-year ABL revolver, a $190 million five-year first-lien term loan B and a $110 million 51/2-year second-lien term loan C, the source said.

Price talk is not yet out, but it is known that the B loan has 101 call protection for one year and the C loan is non-callable for one year, then at 102 in year two and 101 in year three, the source continued.

Barclays Capital Inc. is the lead bank on the deal that will be used to refinance the company's existing capital structure.

Tensar is an Atlanta-based provider of specialty products and engineering services used in the development of commercial, residential, industrial and municipal sites, as well as in transportation infrastructure.

Total Safety sets launch

Total Safety was another deal added to this week's calendar, as the company scheduled a bank meeting for Tuesday to launch a $275 million credit facility (B2) that is being led by Deutsche Bank Securities Inc. and Credit Suisse Securities (USA) LLC, according to a market source.

The facility consists of a $40 million five-year revolver and a $235 million seven-year term loan, with price talk not yet available, the source said.

Proceeds will be used to help fund the buyout of the company by Warburg Pincus from DLJ Merchant Banking Partners, which is expected to close in the fourth quarter.

Total Safety is a Houston-based outsourced provider of integrated safety and compliance solutions and the products necessary to support them.

AGCO plans pro rata deal

News surfaced on Monday that AGCO is looking to get a $900 million five-year credit facility, and top tier banks are currently getting a look at the transaction, while the general bank meeting is targeted for Oct. 18, according to a market source.

The facility consists of a $500 million revolver and a $400 million term loan A, with pricing tied to a leverage and ratings grid, the source said.

Rabobank is leading the deal that will be used to help fund the acquisition of GSI Holdings Corp. from Centerbridge Partners LP for $940 million and to refinance existing credit lines.

Closing is expected before the end of the year, subject to regulatory approval.

AGCO is a Duluth, Ga.-based manufacturer and distributor of agricultural equipment. GSI is an Assumption, Ill.-based manufacturer of grain storage and protein production systems.

Sealed Air closes

In other news, Sealed Air Corp. announced in a news release on Monday that it closed on its $3 billion senior secured credit facility (Ba1/BB+), comprised of a $700 million five-year revolver, a $1.1 billion five-year term loan A, a $790 million seven-year U.S. term loan B and a $410 million seven-year U.S. dollar equivalent euro term loan B.

The revolver is split between a $500 million U.S. tranche and a $200 million multi-currency tranche, and the A loan is split into a $900 million U.S. piece, a $140 million U.S. dollar equivalent JPY piece and a $60 million U.S. dollar equivalent Canadian piece.

Proceeds were used to help fund the purchase of Diversey Holdings Inc. from the Johnson family and Clayton, Dubilier & Rice LLC for $2.1 billion in cash and 31.7 million shares of common stock.

Citigroup Global Markets Inc., Bank of America Merrill Lynch, BNP Paribas Securities Corp. and RBS Securities Inc. led the deal.

Sealed Air pricing

Sealed Air's revolver and term A are priced at Libor plus 250 bps, with the revolver having a 50 bps unused fee. Its U.S. term B is priced at Libor plus 375 bps with a 1% Libor floor and was sold at a discount of 98, and its euro term B is priced at Euribor plus 450 bps with a 1% Euribor floor and was sold at a discount of 97. All of the term B debt includes 101 soft call protection for one year.

During syndication, the U.S. term loan B was downsized from $925 million while the euro tranche was upsized from $275 million, and prior to the term B launch, it was downsized from $1.3 billion as the term loan A was upsized from $1 billion. Additionally, pricing on the U.S. debt was reduced from Libor plus 400 bps and the discount price tightened from 97.

Sealed Air is an Elmwood Park, N.J.-based manufacturer of packaging and performance-based materials and equipment systems for food, industrial, medical and consumer applications. Diversey is a Sturtevant, Wis.-based provider of cleaning, sanitization and hygiene products.

Flexera buyout wraps

The acquisition of Flexera Software by Teachers' Private Capital from Thoma Bravo LLC has been completed, and while the $355 million credit facility has funded, syndication is still ongoing, according to a market source.

The BMO Capital Markets Corp.-led facility consists of a $25 million revolver (B2/B), a $230 million first-lien term loan (B2/B) and a $100 million second-lien term loan (Caa2/CCC+).

Talk on the first-lien term loan is Libor plus 600 bps to 625 bps with a 1.25% Libor floor, a discount of 96 to 97, and 101 soft call protection for one year. Recently, the pricing had been revised from talk of Libor plus 600 bps with a 1.25% floor and a discount of 98, and the call protection was added.

The second-lien loan, meanwhile, is talked at Libor plus 975 bps to 1,000 bps with a 1.25% Libor floor and a discount of 92 to 93, after being revised from initial guidance of Libor plus 925 bps with a 1.25% floor and a discount of 98.

Flexera is a Schaumburg, Ill.-based provider of strategic application usage management services for application producers and their enterprise customers.

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