VWR hits the secondary strong with the U.S. term loan wrapping around 102

By Sara Rosenberg and Paul A. Harris

New York, April 5 - VWR International's credit facility (B1/BB-) broke for trading on Monday in an otherwise quiet secondary, with the U.S. term loan immediately moving higher to 101 3/8 bid, 102 1/8 offered, according to a trader.

The $415 million seven-year term loan is priced with an interest rate of Libor plus 250 basis points and contains a stepdown in pricing to Libor plus 225 basis points if leverage falls below 5x. The tranche was reverse flexed mid-last week from Libor plus 275 basis points on strong demand, and that was also when the stepdown provision was put into the credit agreement.

The facility also consists of a $150 million five-year multi-currency revolver, upsized from $125 million last week, with an interest rate of Libor plus 250 basis points and a €175 million seven-year term loan, upsized last week from €150 million, with an interest rate of Libor plus 275 basis points. The euro term loan was also reverse flexed last week on strong demand from Libor plus 300 basis points.

Deutsche Bank and Citigroup are the lead banks on the deal.

Proceeds, combined with proceeds from a $520 million bond offering, will be used to support the acquisition of VWR by Clayton, Dubilier & Rice Inc. from Merck KGaA for $1.65 billion. The transaction is subject to normal regulatory approvals and is expected to close by April.

The credit facility had been upsized to compensate for a reduction in the equity contribution that will be used to support the buyout as well, the source explained.

On Monday, VWR's bond offering was reworked a bit as the senior notes tranche was upsized to $200 million from $175 million and the senior subordinated notes tranche was downsized to $320 million from $345 million. Price talk on the senior notes is in the 7% area, and price talk on the senior subordinated notes is in the 8% area.

VWR is a West Chester, Pa., distributor of laboratory supplies to the industrial, pharmaceutical, educational and government markets.

Sealy steadies at 'normal' levels

Sealy Corp.'s $560 million eight-year term loan B (B2/B+) held steady on Monday at 101 bid, 101 ¼ offered after slowly backing down from near 102 highs that were reached on the deal's entrance into the secondary market Thursday, according to a fund manager.

"When it broke it was 101 5/8 or 7/8 bid. Offered probably almost hit 102. Since then it's come back to reality. Those were the highs. By late Thursday it was 101½ bid, 101 5/8 offered. It trickled down [more] on Friday. It's just getting back to normal levels. Getting up to 102 is ridiculous," the fund manager said.

The institutional term loan is priced with an interest rate of Libor plus 275 basis points with a stepdown to Libor plus 250 basis points under certain conditions.

Sealy's credit facility also contains an unsecured floating-rate loan, which was recently added to the deal structure, priced with an interest rate of Libor plus 450 basis points and a $125 million six-year revolver (B2/B+) with an interest rate of Libor plus 250 basis points.

The unsecured term loan had been added to the capital structure following a downsizing of the proposed bond offering by $100 million.

JPMorgan and Goldman Sachs are the lead banks on the deal.

Proceeds from the loan, combined with proceeds from the bond offering and equity, will be used to help fund Kohlberg Kravis Roberts & Co.'s (KKR) approximately $1.5 billion acquisition of Sealy. Substantially all of the Trinity, N.C., bedding manufacturer's existing debt will be refinanced in connection with the transaction.

Under the acquisition agreement, KKR and Sealy management will acquire about 92% of Sealy, with existing shareholders retaining the remaining 8% interest. Sealy is being acquired from a private investment group that includes Bain Capital, Charlesbank Capital Partners, JPMorgan Partners, CIBC Argosy Merchant Fund and BancBoston Capital.

Maidenform pricing emerges

Price talk on Maidenform Inc.'s proposed term loans emerged Monday, with the $90 million first lien term loan talked at Libor plus 375 basis points and the $60 million second lien term loan talked at Libor plus 650 basis points, according to a fund manager, who added that these spreads were still rough levels.

BNP Paribas is the lead bank on the deal, which is scheduled to launch via a bank meeting on April 13.

There is also a $30 million revolver portion included in the deal.

Proceeds will be used to support Ares Corporate Opportunities Fund LP's acquisition of Maidenform from Oaktree Capital Management.

Maidenform is a Bayonne, N.J., marketer and manufacturer of intimate apparel.

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