Market awaits surge of new deals launching immediately following Labor Day weekend

By Sara Rosenberg

New York, Sept. 1 - The primary calendar is abuzz with new deals scheduled to hit the market during the week of Sept. 4, including Exco Resources Inc., Open Text Corp., Sedgwick CMS Holdings Inc., Gartmore Investment Management plc, Applied Systems Inc., IPC Information Systems LLC, Lord & Taylor and Orthofix International NV.

In addition, Renfro Corp. is targeting to hold a bank meeting during the week of Sept. 4 as well, and Cinemark USA Inc. is considering joining that list, too.

Exco Resources is set to hold a general syndication bank meeting on Wednesday to launch its proposed $1.5 billion senior secured credit facility consisting of a $750 million five-year second-lien term loan expected in the Libor plus 350 to 400 basis points area and a $750 million four-year revolver with pricing ranging from Libor plus 100 to 175 basis points based on utilization, a company spokesman previously told Prospect News.

The company started presenting the second-lien term loan to some potential investors around mid-August, but those presentations were one-on-one's that took place with a select group of lenders.

The revolver was already launched to senior managing agents in late July.

JPMorgan and Credit Suisse are leading the second-lien term loan, with JPMorgan the left lead. JPMorgan is the lead bank on the revolver.

The credit facility is actually being borrowed by a wholly owned unrestricted subsidiary of Exco to fund the acquisition of Winchester Energy Co. Ltd. from Progress Energy Inc. for $1.2 billion in cash, subject to purchase price adjustments. The debt will be non-recourse to Exco.

Credit statistics for the transaction include first-lien net debt to EBITDA of 2.5x and net debt to EBITDA of 5.4x.

Exco's existing amended and restated revolving credit facility will remain in place following this transaction.

The acquisition is expected to close on Oct. 2, subject to customary conditions to closing and governmental clearance.

Exco is Dallas-based independent energy company.

Open Text launch Wednesday

Also holding a bank meeting on Wednesday is Open Text, which is launching a $490 million credit facility consisting of a $75 million revolver and a $415 million term loan B, according to sources.

RBC Capital Markets is the lead bank on the deal that will be used to fund the acquisition of Hummingbird Ltd. for $27.85 per share, or about $489 million.

The transaction is to be carried out by way of a statutory plan of arrangement and will be voted on by Hummingbird's shareholders at a meeting of shareholders, currently expected to be held in mid-September.

Closing is expected in early October, subject to court approval as well as certain other customary conditions, including the receipt of regulatory approvals.

Open Text is a Waterloo, Ont., provider of enterprise content management software solutions. Hummingbird is a Toronto, Ont., provider of enterprise software solutions.

Sedgwick add-on

Wednesday's line-up will also include a launch for Sedgwick CMS' $150 million term loan B add-on that will be used to fund the acquisition of Security Capital Corp., parent company of CompManagement, Inc., for $191.5 million.

Bank of America and Wachovia are the lead banks on the deal.

Price talk on the add-on is unavailable at this time. Pricing on the existing $300 million term loan B is set at Libor plus 200 basis points.

The closing is subject to regulatory approvals and other customary conditions and is expected to occur late in the third quarter or early in the fourth quarter.

Sedgwick is a Memphis, Tenn., provider of outsourced insurance claims management services to large corporate and public sector entities. Security Capital is a Greenwich, Conn., provider of claims management and cost control services to businesses.

Gartmore N.Y. launch

Gartmore Investment Management joins the list of Wednesday launches as it is set to hold a bank meeting in New York on that day to launch its proposed £310 million credit facility (Ba2/BB+), according to a market source.

A bank meeting will be held in London on Tuesday to launch the deal to European investors.

The London-based asset manager's facility consists of a £300 million seven-year term loan talked at Libor plus 250 basis points and a £10 million seven-year revolver talked at Libor plus 225 bps.

Of the total facility amount, about 60% is expected to be euro denominated and about 40% is expected to dollar denominated.

Goldman Sachs and HSBC are the lead banks on the deal that will be used to help fund the acquisition of Gartmore by Hellman & Friedman LLC from Nationwide Mutual Insurance Co.

Applied Systems to hit Thursday

Moving on to Thursday, Applied Systems will launch its proposed $250 million credit facility consisting of a $220 million first-lien term loan and a $30 million revolver.

Credit Suisse and JPMorgan are the lead banks on the deal, with Credit Suisse the left lead.

Proceeds will be used to help fund the leveraged buyout of Applied Systems by Bain Capital Partners from Vista Equity Partners, LLC. Chairman and chief executive officer James P. Kellner will remain a significant investor in the company.

In addition to the credit facility, the company will be getting $165 million of mezzanine debt for acquisition financing.

Applied Systems is a University Park, Ill., provider of insurance agency and broker management system software.

IPC bank meeting

IPC Information will also be holding a bank meeting on Thursday, scheduled for 9:30 a.m. ET registration and a 10 a.m. ET start at the LeParker Meridien in New York.

The company will be launching a $635 million credit facility consisting of a $50 million six-year revolver, a $415 million seven-year first-lien term loan and a $170 million eight-year second-lien term loan.

Goldman Sachs, JPMorgan and Morgan Stanley are the lead banks on the deal that is expected to be completed in September, with Goldman the left lead.

Proceeds will be used to help fund Silver Lake Partners' leveraged buyout of the company for about $800 million from GS Capital Partners.

IPC is a New York-based provider of mission-critical communications solutions and services.

Lord & Taylor revolver

Lord & Taylor has set a bank meeting with a 2 p.m. ET start for Thursday as well to launch its proposed $350 million ABL revolving credit facility

Bear Stearns and CIT are the joint lead arrangers and joint bookrunners on the fashion retailer's deal, which is expected to close around the end of September.

Proceeds from the revolver will be used for general corporate purposes as well as to help fund the buyout of Lord & Taylor by NRDC Equity Partners from Federated Department Stores for $1.2 billion in cash.

Other buyout financing will come from a CMBS transaction.

Orthofix Thursday business

Yet another deal set to take the stage on Thursday is Orthofix as it too has scheduled a bank meeting for that day to launch its proposed $375 million credit facility (Ba3/BB-), according to a market source.

Wachovia and Citigroup are the lead banks on the deal that consists of a $45 million six-year revolver and a $330 million seven-year term loan B.

In a conference call held earlier this month, company officials said that they expect the term loan to carry an interest rate somewhere in the range of Libor plus 200 to 250 basis points.

Proceeds from the credit facility will be used to help fund the company's $333 million cash acquisition of Blackstone Medical, Inc.

Looking down the road, the company hopes to use some lower cost equity financing sometime within the next 12 months, which could include a convertible financing or, depending on market reaction, equity in the secondary.

The transaction is anticipated to be completed as early as September, subject to the receipt of regulatory approvals, consummation of financing and other customary conditions to closing.

Orthofix is a Curacao, the Netherlands-based diversified orthopedic products company. Blackstone Medical is a Springfield, Mass.-based international spine product company.

Renfro targeted timing

Renfro is targeting late in the week of Sept. 4 for its bank meeting to launch a proposed $235 million credit facility consisting of a $75 million ABL revolver, a $115 million term loan B and a $45 million delayed-draw term loan.

Bear Stearns is the lead bank on the deal that will be used to help fund Kelso & Co.'s leveraged buyout of the company.

Expected ratings on the deal are strong-B's, the source added.

About $57 million in equity will be contributed toward the LBO.

Total leverage will be inside of 4x.

Renfro is a Mt. Airy, N.C., manufacturer of socks for the Fruit of the Loom, Fit First, Vassarette, Ducks Unlimited, and Odor-Eaters brands, among others.

Cinemark eyes early September launch

Lastly, Cinemark is targeting holding a bank meeting during either the week of Sept. 4 or the week of Sept. 11 to launch its proposed $1.27 billion senior credit facility, with the week of Sept. 4 being the hoped for timeframe, according to a market source.

Lehman Brothers and Morgan Stanley are the lead banks on the credit facility, which consists of a $1.12 billion term loan and a $150 million revolver that is expected to be undrawn at closing.

Proceeds from the facility will be used to fund the acquisition of Century Theatres, Inc. and to refinance existing credit facility debt. The equity purchase price for Century is about $681 million. The bank debt to be refinanced includes Cinemark's current senior facility of $254 million and Century's senior facility of $360 million.

The transaction will not constitute a change of control for purposes of Cinemark's 9¾% senior discount notes or its 9% senior subordinated notes.

Completion of the acquisition is subject to the satisfaction of customary closing conditions, including antitrust approval and completion of financing.

Cinemark is a Plano, Texas, motion picture exhibitor. Century is a San Rafael, Calif., motion picture exhibitor.

Kerzner closes

The leveraged buyout of Kerzner International Ltd. by its chairman, Sol Kerzner, and its chief executive officer, Butch Kerzner, was completed, according to a news release. The investor group also includes Istithmar PJSC, Whitehall Street Global Real Estate LP 2005, Colony Capital LLC, Providence Equity Partners Inc. and The Related Cos. LP.

To help fund the LBO, Kerzner got a new $575 million senior secured credit facility consisting of a $250 million seven-year funded term loan B, a $150 million seven-year delayed-draw term loan B and a $175 million six-year revolver, with all tranches priced at Libor plus 300 basis points.

The revolver has a 50 basis point commitment fee.

Credit Suisse and Deutsche Bank acted as joint lead arrangers on the deal.

Other LBO financing will come from a new $2.88 billion CMBS financing facility and equity.

Kerzner is a Paradise Island, The Bahamas, developer and operator of destination resorts, luxury resort hotels and gaming properties.

Energy XXI closes

Energy XXI closed on its $325 million second-lien term loan, according to a company news release. The loan is priced at Libor plus 550 basis points and carries 101 call protection for one year.

During syndication, the term loan was upsized from $300 million.

BNP Paribas and RBS Securities acted as the lead banks on the deal.

Proceeds were used to fund the acquisition of oil and gas properties from Castex Energy Inc.

Energy XXI is a Hamilton, Bermuda-based oil and gas exploration and production company.

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