ResCap, Houghton Mifflin finalize terms, break; Pelican Products, Kronos rework deals

By Sara Rosenberg

New York, June 1 - Residential Capital LLC (ResCap) set revolver and term loan A-1 tranche sizes under its debtor-in-possession financing facility and Houghton Mifflin Harcourt reduced coupon as well as Libor floor on its term loan, and, with terms firmed up, both deals were able to make their way into the secondary market on Friday.

In more loan happenings, Pelican Products Inc. revised its credit facility structure, opting for more first-lien term debt and less second-lien borrowings, and pricing on the second-lien loan was flexed higher.

Also, Kronos Worldwide Inc. increased pricing and amortization on its term loan, Securus Technologies set pricing on its first-lien debt at the low end of guidance, Handy & Harman Ltd. pulled its deal and PRA International released price talk with launch.

ResCap frees up

Residential Capital's DIP financing facility broke for trading on Friday, with the $1.06 billion first-out term loan A-1 quoted at 99¼ bid, 99¾ offered on the open and then it moved to 99 1/8 bid, 99 5/8 offered, according to a market source.

The term loan A-1 was upsized from an original amount of $1.05 billion while the company downsized its revolver to $190 million from $200 million. Potential for the size shifts was announced on Thursday as investors were told that the term loan A-1 could end up anywhere between $1.05 billion to $1,075,000,000 and the revolver could end up in the range of $175 million to $200 million.

Pricing on the revolver and term loan A-1 is Libor plus 375 basis points, with the term loan having a 1.25% Libor floor. The revolver has a 75 bps unused fee and was offered with a 200 bps upfront fee and the A-1 loan was sold at an original issue discount of 99.

During syndication, pricing on the revolver flexed down from Libor plus 400 bps and pricing on the term loan A-1 was reduced from talk of Libor plus 400 bps to 425 bps.

ResCap term A-2

Residential Capital's $1.45 billion 18-month DIP loan also includes a $200 million last-out term loan A-2 (size unchanged), which was seen at 99 bid, par offered when it broke into the secondary market and then it moved to 99 1/8 bid, 99 7/8 offered, the source said.

Pricing on the A-2 loan is Libor plus 550 bps, after flexing recently from Libor plus 600 bps. The debt has a 1.25% Libor floor and was sold at an original issue discount of 98.

The entire DIP has a 50 bps step-up in pricing if ratings by either Moody's Investors Service or Standard & Poor's have not been received by June 30 -a feature that was added during syndication.

Barclays Capital Inc. is leading the deal that will be used to provide liquidity while the company undergoes its Chapter 11 process that is expected to result in the sale of substantially all of its assets.

The restructuring plan is expected to be approved by the fourth quarter.

Residential Capital is a New York-based mortgage originator and servicer.

Houghton starts trading

Houghton Mifflin Harcourt's $500 million 18-month DIP facility allocated as well, with the $250 million term loan (B2) quoted at 99½ bid, par offered on the break and then it softened to 99 1/8 bid, 99 5/8 offered, a trader said.

Pricing on the term loan is Libor plus 600 bps with a 1.25% Libor floor, and it was sold at an original issue discount of 98.

The term loan spread was reduced on Friday morning from Libor plus 625 bps and the floor tightened from 1.5%, with lenders given until noon ET to recommit to the transaction.

The DIP financing also provides for a $250 million ABL revolver (Ba2) that is priced at Libor plus 325 bps.

Citigroup Global Markets Inc. is the lead bank on the deal.

Houghton exit financing

Houghton Mifflin's DIP loan can be turned into an exit facility upon the company's emergence from Chapter 11, which could occur as early as the end of this month.

Upon conversion, the revolver will have a five-year tenor and pricing ranging from Libor plus 225 bps to 275 bps based on availability, and the term loan will have a six-year tenor and 101 soft call protection for one year.

Through its restructuring, the company plans to eliminate $3.1 billion of debt through a debt-to-equity transaction and reduce annual cash interest costs.

Houghton Mifflin is a Boston-based educational publisher in the K-12 market.

Pelican restructures

Meanwhile, Pelican Products made a round of changes to its credit facility on Friday morning, asked for recommitments by 5 p.m. ET and ended up about two times oversubscribed at the new terms, according to a market source.

Under the revised structure, the six-year first-lien term loan is sized at $350 million, up from $335 million, while pricing was left unchanged at Libor plus 550 bps with a 1.5% Libor floor and an original issue discount of 98, the source said. There is still 101 repricing protection for one year.

On the flip side, the seven-year second-lien term loan was reduced to $100 million from $115 million, and pricing was raised to Libor plus 1,000 bps from Libor plus 900 bps, the source continued. The 1.5% Libor floor, original issue discount of 98 and call protection of 103 in year one, 102 in year two and 101 in year three were left intact.

Pelican getting revolver

Pelican Products' $480 million credit facility also provides for a $30 million revolver that is priced at Libor plus 550 bps with a 1.5% Libor floor and an original issue discount of 98.

Credit Suisse Securities (USA) LLC is leading the deal that will be used to help fund the purchase of the company by Behrman Capital PEP from an existing Behrman fund.

Pelican Products is a Torrance, Calif.-based designer and manufacturer of advanced lighting systems and virtually indestructible cases.

Kronos ups spread

Kronos also revised its deal, moving pricing on its $600 million senior secured term loan B (Ba3/BB-) to Libor plus 425 bps from Libor plus 375 bps, beefing up amortization to 5% per year from 1% per year and adding a net leverage test of 3½ times, according to a market source.

The term loan still has a 1% Libor floor, an original issue discount of 99 and 101 soft call protection for one year.

Lead bank, Wells Fargo Securities LLC, is seeking recommitments by end of the day on Monday.

Proceeds from the company's $725 million credit facility, which also provides for a $125 million ABL revolver that is not being syndicated, will be used to refinance existing debt, including 6½% senior secured notes due April 2013, and for general corporate purposes, which could include the payment of a special dividend of up to $1 per share.

Kronos is a Dallas-based producer of titanium dioxide products.

Securus finalizes coupon

Securus Technologies firmed the spread on its $291 million first-lien term loan at Libor plus 525 bps, the low end of the Libor plus 525 bps to 550 bps talk, according to a market source, who said that the 1.25% Libor floor and an original issue discount of 99 were left unchanged.

The company's $436 million credit facility also includes a $40 million revolver and a $105 million second-lien term loan.

BNP Paribas Securities Corp. is leading the deal that will be used to refinance existing debt and fund a dividend.

Securus Technologies is a Dallas-based provider of telecommunications products and services for the corrections marketplace.

Handy pulls B loan

Handy & Harman has withdrawn its $200 million term loan B (B3/B) from market as a result of poor conditions, a market source told Prospect News.

The loan had been talked at Libor plus 550 bps, with a 1.25% Libor floor and an original issue discount of 99, and includes 101 soft call protection for one year.

Wells Fargo Securities LLC and Bank of America Merrill Lynch were leading the deal that was going to be used to refinance existing debt, including about $90 million of first- and second-lien term loans and about $40 million of subordinated debt.

Handy & Harman is a White Plains, N.Y.-based industrial company involved in precious metals, tubing and engineered materials.

SMG fills out

On the back of its changes, SMG's first- and second-lien term loans reached oversubscription levels and the goal is to allocate the deal sometime during the week of June 4, a market source said.

The $255 million six-year first-lien term loan is priced at Libor plus 425 bps with a 1.25% Libor floor and an original issue discount of 99, and includes 101 repricing protection for one year. This tranche was upsized recently from $240 million.

And, the $105 million 61/2-year second-lien term loan is priced at Libor plus 950 bps with a 1.25% Libor floor and a discount of 98, and includes call protection of 103 in year one, 102 in year two and 101 in year three. This loan was downsized from $125 million and pricing was lifted from Libor plus 900 bps.

Recommitments toward the $385 million credit facility, which also includes a $25 million revolver, were due at 3 p.m. ET on Friday.

Credit Suisse Securities (USA) LLC and GE Capital Markets are leading the deal that will be used by the West Conshohocken, Pa.-based venue management company to refinance existing debt.

PRA sets talk

In more primary happenings, PRA International held a bank meeting on Friday morning to launch a $410 million credit facility (B1), and with the event, price talk was announced, according to a market source.

The facility's $40 million revolver is talked at Libor plus 400 bps with no Libor floor, and the $370 million term loan B is talked at Libor plus 475 bps with a 1.25% Libor floor, an original issue discount of 99 and 101 soft call protection for one year, the source remarked.

Wells Fargo Securities LLC and UBS Securities LLC are leading the deal that will be used to refinance existing debt.

PRA International is a Raleigh, N.C.-based clinical research organization.

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