Texas Competitive trades up with alleged default; Visant, Vantage Oncology, Playboy break

By Sara Rosenberg

New York, Feb. 28 - Texas Competitive Electric Holdings Company LLC's loans were stronger following news that one of the lenders under the credit facility is alleging that a default took place, a claim that the company intends to fight.

Also in trading, Visant Corp.'s term loan freed up after a small tweak to the call protection, and Vantage Oncology Inc. and Playboy Enterprises Inc. saw their credit facilities hit the secondary market as well.

Over in the primary, Fairmount Minerals Ltd. and Novelis Inc. released price talk on their term loan Bs as the deals were presented to lenders during the session, and General Chemical Performance Products LLC (GenTek Inc.) launched its repricing deal at previously expected guidance.

Additionally, Arizona Chemical Inc., American Seafoods Group LLC and Transtar Industries Inc. began circulating talk on their upcoming deals, and IMS Health Inc. and Airvana Corp. announced plans for new loans.

Furthermore, Allegiant Travel Co. made some changes to its term loan, including revising the Libor floor and original issue discount as a result of strong demand, and Evertec Inc. firmed pricing at the high end of talk.

Texas Competitive rises

Texas Competitive's term loans headed higher as it was announced that Aurelius Capital Management LP, a lender under the credit facility, is alleging that the company is in default as a result of certain intercompany loans that were made, according to traders.

One trader had the term loan B-1 and B-2 quoted at 84 1/8 bid, 84 5/8 offered, up from 82½ bid, 83½ offered on Friday. A second trader, meanwhile, had the term loan B-1 quoted at 84 bid, 84½ offered, the term loan B-2 quoted at 84¼ bid, 84½ offered and the term loan B-3 quoted at 83 7/8 bid, 84 3/8 offered, with all tranches up about a point on the day.

"Maybe a default or an amendment is enough to move the needle. Maybe folks see this as a catalyst to improve pricing," the first trader remarked in explanation of why the loans were stronger.

"Bank debt is up because people think if the company has to file for bankruptcy, recoveries are better than where the loan is trading. [Also], think they're close to covenants. Maybe get a technical amendment instead of filing," the second trader added.

Texas Competitive holds call

Texas Competitive was scheduled to hold a conference call at 4 p.m. ET on Monday to discuss the alleged default, which it claimed in an 8-K filed with the Securities and Exchange Commission was "without merit."

"We intend to defend ourselves vigorously against these allegations and to continue operating in compliance with the terms and conditions of each of EFH's, TCEH's and their respective affiliates' debt agreements, including the TCEH senior secured credit facilities," the company said in the filing.

Specifically, Aurelius is alleging that the intercompany loans do not comply with the requirement that these loans be made on an arm's-length basis and that the non-compliance has resulted in a failure to make certain mandatory prepayments under the credit facility.

As of Feb. 24, Aurelius held about $50 million of term loans as a lender of record, or 0.2%, of the $23.9 billion of debt outstanding under the credit facility.

Citibank is the administrative agent on the Dallas-based energy company's deal.

Visant tops par

Visant's $1.25 billion 61/4-year senior secured term loan B broke for trading on Monday, with levels quoted at par 1/8 bid, par ½ offered, according to a trader.

Pricing on the term loan is Libor plus 400 basis points with a 1.25% Libor floor, and it was sold at par. There is 101 soft call protection for one year, which, during syndication, was changed from 101 call protection through September 2011.

Credit Suisse and KKR are leading the deal that is being used to reprice an existing term loan that was obtained in September to fund a recapitalization.

Pricing on the existing deal is Libor plus 525 bps with a 1.75% Libor floor, and it was sold at an original issue discount of 98. There is 101 soft call protection for one year, which lenders received with this repricing.

Visant is an Armonk, N.Y.-based marketing and publishing services enterprise servicing the school affinity, direct marketing, fragrance and cosmetics, and educational and trade publishing segments.

Vantage starts trading

Vantage Oncology was another deal to free up, with the strip of $220 million term loan B and $25 million delayed-draw term loan quoted at 99¾ bid, according to a market source.

Pricing on the term loans is Libor plus 475 bps with a 1.5% Libor floor, and there were sold at an original issue discount of 99. There is 101 soft call protection for one year.

During syndication, the funded term loan was downsized from $221 million, the spread was cut from Libor plus 525 bps, the floor came in from 1.75%, the discount tightened from 98½ and call protection was added. Also, the delayed-draw term loan was added to the capital structure.

The delayed-draw loan is available for six months for acquisition financing and includes a 75 bps ticking fee.

Vantage being acquired

Proceeds from Vantage Oncology's credit facility will be used to help fund the buyout of the company by Oak Hill Capital Partners and its portfolio company Physicians Oncology Services LP, an Atlanta-based operator of outpatient radiation oncology centers.

The $270 million senior secured credit facility (B2/B) also provides for a $25 million five-year revolver.

Jefferies and SunTrust are the lead banks on the deal.

Vantage Oncology is a Manhattan Beach, Calif.-based owner and operator of radiation oncology centers.

Playboy breaks

Playboy also made its way into the secondary, with the $185 million six-year term loan quoted at 99¾ bid, according to a market source.

Pricing on the loan is Libor plus 650 bps with a 1.75% Libor floor, and it was sold at an original issue discount of 98. The tranche is non-callable for one year, then at 102 in year two and 101 in year three.

The company's $195 million credit facility also includes a $10 million five-year revolver that is expected to be undrawn at close.

During syndication, the term loan was upsized from $160 million and pricing firmed at the tight end of the Libor plus 650 bps to 700 bps talk, and the revolver was downsized from $20 million.

Playboy funding buyout

Proceeds from Playboy's credit facility, which is being led by Jefferies, will be used to help fund its acquisition by Icon Acquisition Holdings LP, a limited partnership controlled by Hugh M. Hefner, for $6.15 per share.

Other funds for the transaction will come from equity committed by Rizvi Traverse Management LLC. The amount of equity was reduced by $15 million as a result of the term loan upsizing.

The remaining extra $10 million that is being obtained because of the term loan upsizing is being used to add cash to the balance sheet.

Closing of the buyout is expected to take place before or shortly after the end of the first quarter, subject to more than 50% of the shares being tendered. It is not subject to financing.

Playboy is a Chicago-based media and lifestyle company.

Fairmount reveals talk

Switching to the primary, Fairmount Minerals held a conference call at 3 p.m. ET on Monday to launch a proposed $1 billion six-year term loan B, and in connection with the event, price talk was announced, according to a market source.

Price talk on the term loan B is Libor plus 350 bps to 375 bps with a 1.25% Libor floor and a par offer price, the source said, adding that the tranche also includes 101 soft call protection for one year.

Barclays, KeyBank, Bank of America Merrill Lynch and PNC are the lead banks on the deal that came to market quickly, as it was first disclosed to investors early in the morning.

Commitments are due on March 7.

Fairmount funding div recap

Proceeds from Fairmount Minerals' new term loan B will be used to repay an existing term loan A and term loan B, and to fund a $300 million dividend.

The existing bank debt was obtained in August 2010 to help fund the company's buyout by American Securities.

At close, the term loan A was sized at $150 million and the term loan B was sized at $550 million. Both were priced at Libor plus 450 bps with a 1.75% Libor floor and were sold at an original issue discount of 981/2. Also, both include a step-down to Libor plus 425 bps when leverage is less than 2.75 times and after receipt of June 30 financials.

The B loan is getting repaid at 101 due to the presence of 101 soft call protection for one year, and the A loan is being repaid at par.

Upon coming to market last year, the company's corporate rating was B1/BB- and its facility rating was B1/BB. With this new deal, the corporate rating will stay the same but the facility rating is going to B1/BB-.

Fairmount amending facility

In addition to getting a term loan B, Fairmount Minerals' is amending its credit agreement to allow for the new deal and to modify the covenant package, which will include removing the interest coverage ratio and capital expenditures requirement and setting the leverage ratio at 4.75 times throughout the life of the deal, instead of having steps, the source said.

Revolver and term loan A lenders are being offered a 25 bps amendment fee.

The source continued to say that since closing on the original facility in August, the company has performed really well. At closing of the original deal, Fairmount Minerals had $165 million of LTM EBITDA and leverage was about 4.3 times, and now LTM EBITDA is over $250 million and, as a result, pro forma leverage for the dividend recapitalization will be 4.0 times.

Fairmount Minerals is a Chardon, Ohio-based producer of industrial sand.

Novelis guidance emerges

Novelis also held a call on Monday to launch a repricing transaction, under which it is looking to lower the spread on its $1.5 billion six-year senior secured term loan B to Libor plus 300 bps with a step-down to Libor plus 275 bps at less than total net leverage of 3.5 times, and a 1% Libor floor, according to a market source. The loan is being offered at par and includes 101 soft call protection for six months, followed by par ½ in the next six months.

By comparison, when the term B was obtained in December as part of a dividend recapitalization, pricing was Libor plus 375 bps with a step to Libor plus 350 bps at less than 3.5 times leverage. There is a 1.5% Libor floor and 101 soft call protection for one year, and the debt was sold at a discount of 99.

Bank of America Merrill Lynch, Citigroup, JPMorgan, RBS and UBS are the lead banks on the deal and are asking for commitments by noon ET on Friday. Allocations are expected to go out early in the week of March 7.

Novelis is an Atlanta-based aluminum-rolled products and beverage can recycling company.

General Chem launches

General Chemical Performance Products launched the repricing of its $425 million term loan on Monday as well, with price talk coming out at previously expected levels, according to a market source.

The loan is talked at Libor plus 350 bps to 375 bps with a 1.5% Libor floor, a par offer price and 101 soft call protection for one year, the source said.

By comparison, the existing term loan is priced at Libor plus 500 bps with a 1.75% Libor floor and had been sold at an original issue discount of 98½ when it was obtained late last year for a dividend recapitalization.

Existing lenders are getting paid down at 102 as a result of the call protection that is in place on the term loan: 102 in year one and 101 in year two.

Goldman Sachs is the lead bank on the deal for the Parsippany, N.J.-based manufacturer of organic and inorganic chemicals.

Arizona Chem floats talk

Continuing on the topic of price talk, Arizona Chemical is guiding its $470 million term loan B at Libor plus 325 bps to 350 bps with a 1.5% Libor floor and a par offer price ahead of the Tuesday call that will launch the repricing, according to a market source, who added that there is 101 soft call protection for one year.

When the loan was obtained late last year to help fund the company's buyout by American Securities, it was priced at Libor plus 500 bps with a 1.75% Libor floor, and was sold at an original issue discount of 981/2. There is 101 soft call protection for one year, so existing guys are being taken out at 101.

Goldman Sachs is the left lead bank on the bank deal.

Arizona Chemical is a Jacksonville, Fla., supplier of pine chemicals to the adhesives, inks and coatings and oleochemicals markets.

ASG discloses guidance

American Seafoods Group revealed talk on its proposed $100 million term loan A in the Libor plus high-200 bps context and its term loan B at Libor plus 300 bps with a 1.25% Libor floor and a par offer price as the deal is getting ready to launch with a call on Tuesday as well, according to a market source.

Proceeds from the term loan A will be used to pay down the term loan B that was originally sized at $390 million when it was obtained in 2010 as part of a refinancing transaction, and the smaller B loan is then being repriced from Libor plus 400 bps with a 1.5% Libor floor. It was sold at an original issue discount of 99 in 2010.

Bank of America Merrill Lynch is the lead bank on the deal.

Following news of the refinancing, the existing B loan was quoted at par bid, par ½ offered, down from par ½ bid, 101 offered previously, a trader added.

American Seafoods is a Seattle-based harvester, processor, preparer and supplier of seafood.

Transtar price talk

Transtar Industries is talking the repricing of its $240 million first-lien term loan B at Libor plus 325 bps with a 1.25% Libor floor, a par offer price and 101 soft call protection for one year, according to a market source.

By comparison, when obtained late last year for a buyout by Friedman Fleischer & Lowe, pricing on the term loan B was Libor plus 450 bps with a step-down to Libor plus 425 bps at less than 4.5 times leverage. There is a 1.75% Libor floor and 101 soft call protection for one year, which lenders are receiving with the repricing, and it was sold at an original issue discount of 99.

RBC is the left lead bank on the deal that will launch with a conference call at 1:30 p.m. ET on Tuesday.

Transtar is a Cleveland-based transmission parts provider.

IMS readies deal

Another deal that is set to launch with a call on Tuesday is IMS Health's repricing of a roughly $2 billion term loan that was obtained last year to help fund its buyout by TPG Capital and the CPP Investment Board, according to a market source.

At close, the term loan was comprised of a $1.25 billion U.S. piece priced at Libor plus 350 bps and a €550 million euro piece priced at Euribor plus 375 bps. Both term loans include a 1.75% Libor floor, and both were sold at an original issue discount of 99.

Goldman Sachs is the left lead bank on the deal.

IMS Health is a Norwalk, Conn.-based provider of market intelligence to the pharmaceutical and health care industries.

Airvana coming soon

Meanwhile, Airvana is expected to launch a new credit facility this week, according to a market source, who said that details on structure are not yet available.

Societe Generale and Macquarie are the lead banks on the deal that is rumored to be refinancing existing debt.

In the summer of 2010, the company got a $360 million four-year term loan priced at Libor plus 900 bps with a 2% Libor floor, which was sold at an original issue discount of 98 and was used for a dividend recapitalization.

Airvana is a Chelmsford, Mass.-based provider of mobile broadband network infrastructure products.

Allegiant reworks loan

In more primary happenings, Allegiant Travel reduced the Libor floor on its $125 million term loan (Ba3/BB-) to 1.5% from 1.75% and cut the original issue discount to 99½ from 99, while leaving the spread at Libor plus 425 bps and 101 soft call protection for one year unchanged, according to a market source.

Commitments are now due from lenders on Wednesday, after the deadline was accelerated from Friday, the source said.

Citadel Securities is leading the deal that will be used for general corporate purposes, including to fund capital expenditures.

Allegiant Travel is a Las Vegas-based all-jet passenger airline company.

Evertec sets pricing

Evertec finalized pricing on its $354 million term loan B at Libor plus 400 bps, the wide end of the initial Libor plus 375 bps to 400 bps talk, and left the 1.5% Libor floor, 101 soft call protection for six months and par offer price intact, according to a market source.

Bank of America Merrill Lynch and Morgan Stanley are the lead banks on the $404 million credit facility, which also includes a $50 million revolver.

Proceeds will be used to refinance the company's credit facility that was obtained in the fall of 2010 to help fund Apollo Management LP's acquisition of 51% of Evertec from Popular Inc.

The facility consisted of a $355 million term loan priced at Libor plus 525 bps with a 1.75% Libor floor, which was sold at an original issue discount of 97 and has 101 soft call protection for one year, and a $50 million revolver.

Evertec is a Puerto Rico-based provider of transaction processing, payment processing, merchant acquiring and other related services.

GNC tweaks deal

Also updating its in market deal was General Nutrition Centers Inc., as it increased its seven-year term loan B to $1.2 billion from $1.1 billion, reduced pricing to Libor plus 300 bps from Libor plus 350 bps, tightened the discount to 99¾ from 99½ and added 101 soft call protection for one year, according to a market source. The 1.25% Libor floor was left unchanged.

The company's now $1.28 billion credit facility (B1/B+), up from $1.18 billion, also includes an $80 million five-year revolver.

JPMorgan and Goldman Sachs are the lead banks on the deal that will be used to refinance existing debt.

General Nutrition Centers is a Pittsburgh-based specialty retailer of nutritional products, including vitamin, mineral, herbal and other specialty supplements and sports nutrition, diet and energy products.

Arrowhead wraps syndication

In other news, Arrowhead General Insurance Agency Inc. successfully syndicated its $172 million senior secured credit facility at initial talk and the deal is expected to close and fund later this week, according to a market source.

The $15 million five-year revolver (B3) and $115 million six-year first-lien term loan (B3) are both priced at Libor plus 575 bps, while the $42 million seven-year second-lien term loan (Caa1) is priced at Libor plus 950 bps. All tranches have a 1.75% Libor floor, the revolver has a 75 bps unused fee, the first-lien term loan was sold at a discount of 98 and the second-lien term loan was sold at 97. Call protection on the second-lien term loan is 103 in year one, 102 in year two and 101 in year three.

RBC and Macquarie are leading the deal that will be used to refinance an existing credit facility.

Arrowhead is a San Diego-based national insurance program manager.

Encompass closes

Encompass Digital Media Inc. completed its acquisition of the content distribution business of Ascent Media Corp., according to a news release.

To help fund the transaction, the company got a $195 million senior secured credit facility (B2/B+), consisting of a $175 million term loan B and a $20 million revolver, with the tranches priced at Libor plus 600 bps with a 1.75% Libor floor, and both were sold at an original issue discount of 98.

During syndication, pricing on the facility was increased from Libor plus 550 bps and the discount widened from 981/2.

Macquarie Capital acted as the arranger and bookrunner on the deal.

Encompass is a Los Angeles-based digital media services provider.

Sedwick completes deal

Sedgwick Claims Management Services Inc. completed its purchase of Specialty Risk Services LLC, a third-party claims administrator, from the Hartford Financial Services Group Inc., according to a news release.

To help fund the transaction and refinance an existing $400 million first-lien term loan B, Sedgwick got a new $650 million amended and restated term loan B due Dec. 31, 2016 priced at Libor plus 350 bps with a step-down to Libor plus 325 bps when leverage is less than 4.25 times. There is a 1.5% Libor floor and 101 soft call protection for six months, and the debt was sold at par.

During syndication, the term loan was upsized from $600 million, pricing was lowered from Libor plus 375 bps and the step-down was added.

Pricing on the existing loan was Libor plus 400 bps with a 1.5% floor. It was sold at 99 when obtained last year for the company's buyout by Stone Point Capital LLC and Hellman & Friedman LLC.

Bank of America and Barclays acted as the lead banks on the deal for the Memphis, Tenn.-based provider of claims and productivity management services to corporate and institutional clients.

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