Sequa breaks; Skilled Healthcare, Kindred, ManorCare dip on sector worries; AGCO fills out

By Sara Rosenberg

New York, Oct. 28 - Sequa Corp.'s term loan allocated and emerged in the secondary market on Friday afternoon, with levels seen above the original issue discount price.

Also in trading, Skilled Healthcare Group Inc., Kindred Healthcare Inc. and HCR ManorCare saw drops in their term loan levels as the nursing home sector came under pressure with chatter that Skilled Healthcare's Medicaid reimbursement for California is being cut.

Over in the primary, AGCO Corp.'s pro rata credit facility has been met with very strong demand, resulting in the transaction being well oversubscribed ahead of its upcoming commitment deadline, and National Healing Corp. nailed down timing on the launch of its first-and second-lien deal.

Sequa hits secondary

Sequa's $200 million incremental senior secured term loan (B1/B-) freed up for trading on Friday, with levels quoted at par bid, par ¾ offered, according to a market source.

Pricing on the term loan is Libor plus 475 basis points with a 1.5% Libor floor, and it was sold at an original issue discount of 99. There is 101 soft call protection for six months.

During syndication, pricing was lowered from talk of Libor plus 500 bps to 525 bps, the discount firmed at the tight end of the 98½ to 99 guidance, and the call protection was shortened from one year.

Barclays Capital Inc. and Credit Suisse Securities (USA) LLC are leading the deal that will be used, along with cash on hand, to fund the $245 million acquisition of Roll Coater Inc.

Sequa is a New York-based diversified aerospace and industrial company. Roll Coater is an Indianapolis-based coil coating company.

Nursing homes retreat

The nursing home sector was under scrutiny as there was news out that Skilled Healthcare is facing a 10% decrease to Medicaid reimbursement for California, and as a result, Skilled Healthcare, Kindred Healthcare and ManorCare saw term loan levels fall, according to traders.

One trader remarked that Skilled Healthcare has 40% of its revenues coming from California, and the reimbursement cut would trim about $10 million from EBITDA.

He went on to explain that the chatter was not good for a sector that is already looking at an 11% drop in Medicare payments.

And, Kindred Healthcare also has a large amount of facilities in California, which may have contributed to its decline, the trader added.

Nursing home levels

With the news, Skilled Healthcare, a Foothill Ranch, Calif.-based operator of long-term care facilities, saw its term loan quoted by a trader at 93½ bid, 94½ offered, down from 94 bid, 95½ offered.

Meanwhile, Kindred Healthcare, a Louisville, Ky.-based health care services company, saw a larger drop, with its term loan quoted by traders at 92½ bid, 94½ offered, down from 94½ bid, 96½ offered.

And, ManorCare, a Toledo, Ohio-based provider of short-term, post-acute services and long-term care, experienced a reaction in line with Kindred Healthcare's as one guy was quoting the paper at 87 bid, 89 offered, down from 89 bid, 91 offered.

A second trader, however, was seeing ManorCare's loan at 89 bid, 91 offered on Friday afternoon. He did not see levels on Thursday, but on Wednesday he was quoting it at 90 bid, 91½ offered.

AGCO well met

Moving to the primary, AGCO's $900 million five-year unsecured credit facility has attracted a lot of interest from investors, so much so that the deal is "well on [its] way to being two times oversubscribed" by Tuesday's commitment deadline, a market source told Prospect News on Friday.

The facility consists of a $500 million revolver and a $400 million term loan A, with both tranches talked at Libor plus 150 bps and the revolver having a 25 bps commitment fee.

Rabobank is the left lead bank on the deal.

Prior to the general launch, the facility was being shopped to top-tier banks. As a result of that round, J.P. Morgan Securities LLC, SunTrust Robinson Humphrey Inc. and Bank of Tokyo signed on as lead arrangers on the deal.

AGCO buying GSI

Proceeds from AGCO's credit facility 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.

Ratings have been reaffirmed from Moody's Investors Service and Standard & Poor's. Moody's has the corporate family rating at Ba1 and subordinated rating at Ba2, and S&P rates the company at BBB-.

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.

National Healing timing

Additionally, on the primary front, National Healing firmed up timing on the launch its $355 million senior secured credit facility with the scheduling of a bank meeting for Thursday afternoon, according to a market source. The deal has already gone through a pre-marketing round.

The facility consists of a $30 million five-year revolver, a $250 million six-year first-lien term loan and a $75 million seven-year second-lien term loan, with price talk not yet available.

Jefferies & Co., RBC Capital Markets LLC and BMO Capital Markets Corp. are the lead banks on the deal.

First-lien leverage will be 3.5 times and total leverage will be 4.5 times.

National Healing merging

National Healing, a Metalmark Capital portfolio company, will used proceeds from the new credit facility to help fund its merger with Diversified Clinical Services (Wound Care Holdings).

With the merger, Diversified Clinical Services is being purchased by Metalmark from the Jordan Co.

Completion of the transaction is subject to customary closing conditions, including regulatory approval.

Boca Raton, Fla.-based National Healing and Jacksonville, Fla.-based Diversified Clinical Services are providers of wound care services to hospitals.

Web.com closes

In other news, Web.com Group Inc. closed on its $800 million senior secured credit facility, consisting of a $50 million five-year revolver (Ba3/B), a $600 million six-year first-lien term loan B (Ba3/B) and a $150 million seven-year second-lien term loan (B3/CCC+), according to an 8-K filed with the Securities and Exchange Commission on Friday.

Pricing on the revolver is Libor plus 550 bps with a 50 bps unused fee. Pricing on the first-lien term loan is Libor plus 550 bps with a 1.5% Libor floor, and it was sold at an original issue discount of 88, and pricing on the second-lien loan is Libor plus 950 bps with a 1.5% Libor floor.

The first-lien term loan has 101 soft call protection for one year, and the second-lien loan is noncallable for one year, then at 103 in year two, 102 in year three and 101 in year four.

During syndication, the discount on the first-lien term loan finalized at the high end of revised talk of 88 to 89, and much wider than the initial talk of 96½ to 97.

Web.com lead banks

J.P. Morgan Securities LLC, Deutsche Bank Securities Inc., Goldman Sachs & Co. and SunTrust Robinson Humphrey Inc. acted as the lead banks on Web.com's credit facility.

Proceeds were used to fund the acquisition of a majority stake in Network Solutions from General Atlantic LLC for $405 million in cash and 18 million shares of common stock, refinance existing debt and for general corporate purposes.

Web.com is a Jacksonville, Fla.-based provider of internet services and online marketing services. Network Solutions is a Herndon, Va.-based provider of website services, online marketing and domain-name registration.

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