PrimeLine breaks; Amaya dips with earnings; Hamilton Sundstrand slides on ratings downgrades

By Sara Rosenberg

New York, Nov. 10 – PrimeLine Utility Services LLC’s credit facility began trading during Tuesday’s market hours, with the term loan B quoted above its original issue discount, and Amaya Inc.’s term loans weakened as full-year earnings guidance was revised downwards.

Also in trading, Hamilton Sundstrand Industrial (Accudyne Industries Borrower SCA) saw its term loan fall after a double-notch ratings downgrade, and Sequa Corp.’s term loan moved around on the back of quarterly results.

Moving to the primary market, Belk Inc. reduced the size of its term loan and increased the size of its ABL revolver, Star West Generation LLC and Higginbotham released price talk with launch, and Genex Holdings Inc. came to market with an add-on first-lien term loan.

PrimeLine tops OID

PrimeLine Utility Services’ credit facility broke for trading on Tuesday morning, with the $270 million seven-year covenant-light term loan B quoted at 99¼ bid, 99¾ offered, according to a trader.

Pricing on the term loan is Libor plus 550 basis points with a 1% Libor floor, and it was sold at an original issue discount of 99. The debt has 101 soft call protection for one year.

During syndication, the spread on the term loan firmed at the wide end of the Libor plus 525 bps to 550 bps talk, and the call protection was extended from six months.

The company’s $330 million credit facility (B3/B+) also includes a $60 million five-year revolver.

BNP Paribas Securities Corp., Credit Suisse Securities (USA) LLC, Macquarie Capital (USA) Inc. and Keybanc Capital Markets are leading the deal that will be used to refinance existing debt.

PrimeLine Utility Services is a Seattle-based provider of end-to-end infrastructure solutions to electric, gas and telecommunications customers.

Amaya retreats

In more secondary happenings, Amaya’s term loans dropped after the company lowered full-year 2015 estimates, traders remarked.

For 2015, the company is now projecting revenues between C$1.289 billion to C$1.339 billion, as opposed to between C$1.446 billion to C$1.564 billion, pro forma adjusted net earnings between C$345 million to C$365 million, or C$1.66 to C$1.75 per diluted share, instead of C$367 million to C$415 million, or C$1.76 to C$2.00 per diluted share, and an adjusted net leverage ratio at Dec. 31 between 5.19 to 5.37, instead of between 4 to 4.5.

“The general strengthening of the U.S. dollar relative to certain foreign currencies, primarily the euro, has resulted in an approximate 19% decline in the purchasing power of our customer base and has had a significant negative impact on our revenues, higher than we previously anticipated,” said David Baazov, chairman and chief executive officer, in a news release in explanation of the revised guidance.

“Other factors negatively impacting our previously anticipated revenues included a recent strategic decision to delay the rollout of significant aspects of our new online sportsbook offering across geographies while we enhance the consumer product experience and complete the product offering, as well as the temporary cessation of our operations in Portugal and Greece. Due to this anticipated decline in revenues, we are also projecting less adjusted EBITDA and pro forma adjusted net earnings than our previous guidance,” Baazov added.

Amaya trading levels

One trader had Amaya’s first-lien term loan quoted post-news at 95 bid, 97 offered, down from 97½ bid, 98½ offered, and a second trader had the loan at 93½ bid, 95½ offered, down from 98 bid, 98½ offered. The second-lien term loan was quoted by a trader at 98 bid, par offered, down from 100¼ bid, 101 offered.

In addition to the change in guidance, the company put out third quarter numbers that a trader said fell short of expectations, which he cited as another reason why the term loan traded lower on Tuesday.

For the third quarter, the company reported revenues of about C$324.7 million, versus around C$299.5 million in the third quarter in 2014, and adjusted net earnings of about $90.5 million, or C$0.44 per diluted share, compared to C$79.8 million, or C$0.38 per diluted share last year.

Furthermore, adjusted EBITDA for the quarter was around C$141.2 million, versus about C$130.5 million in the prior year.

Amaya is a Pointe-Claire, Quebec-based provider of gaming products and services.

Hamilton Sundstrand softens

Hamilton Sundstrand’s term loan fell to 88 bid, 90 offered from 91 bid, 93 offered in reaction to downgrades from Moody’s Investors Service, a trader said.

The corporate family rating was cut to Caa1 from B2, the secured debt rating was lowered to B3 from B1 and the senior unsecured debt rating was revised to Caa3 from Caa1.

The trader remarked that CCC baskets in CLOs are at maximum capacity, and, as a result, there was selling in Hamilton Sundstrand after the downgrades were announced.

Moody’s attributed the downgrades to the expectation of high financial leverage (9 times through 2016 and into 2017) at the company for some time due to an adverse operating environment from challenging end markets.

Hamilton Sundstrand is a Dallas-based manufacturer of flow control equipment and air compressors.

Sequa bounces around

Sequa’s term loan moved about in trading in reaction to quarterly earnings being released to lenders, according to a trader.

The debt was quoted on Tuesday by one trader at 76½ bid, 78½ offered and by a second trader at 76 bid, 77½ offered. Both traders said that prior to numbers coming out on Monday, the loan was quoted at 82 bid, 84 offered.

The second trader went on to remark that by the end of the day on Monday, the term loan had dropped as low as to be wrapped around 70, so it did spend Tuesday rebounding partially from those lows.

Sequa is a Tampa, Fla.-based diversified industrial company that operates in the aerospace and metal coatings industries.

Belk retranches

Switching to the primary market, Belk trimmed its seven-year first-lien covenant-light term loan B to $1.5 billion from $1.6 billion and lifted its ABL revolver to $900 million from $800 million, according to a market source, who said an additional $100 million will be drawn under the revolver to make up for the lost term loan funds.

Talk on the term loan is Libor plus 450 bps to 475 bps with a 1% Libor floor, an original issue discount of 98 to 98.5 and 101 soft call protection for one year.

Morgan Stanley Senior Funding Inc., Bank of America Merrill Lynch, Jefferies Finance LLC, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Nomura Securities International Inc., RBC Capital Markets LLC and MCS Capital Markets are leading the deal that will help fund the buyout of the company by Sycamore Partners for $68.00 per share in cash. The transaction has an estimated enterprise value of about $3 billion.

Closing is expected in the fourth quarter, subject to customary conditions, including the receipt of regulatory and stockholder approval.

Belk is a Charlotte, N.C.-based department store company.

Star West sets guidance

Star West Generation held its call on Tuesday, launching its $450 million senior secured term loan B due March 13, 2020 with talk of Libor plus 475 bps with a 1% Libor floor, an original issue discount of 97 and 101 soft call protection for one year, a market source remarked.

Commitments are due at 5 p.m. ET on Nov. 20 and closing is expected on Nov. 30, the source added.

Citigroup Global Markets Inc., Barclays and Morgan Stanley Senior Funding Inc. are leading the deal that will be used to refinance existing term loans in connection with the sale of the company’s GWF assets.

Star West is a Houston-based independent power producer.

Higginbotham discloses talk

Higginbotham came out with talk of Libor plus 525 bps with a 1% Libor floor and an original issue discount of 99 on its $190 million six-year first-lien term loan B (B2/B) that launched with a bank meeting during the session, a source said.

The company’s $280 million credit facility also includes a $40 million revolver (B2/B) and a $50 million 6.5-year second-lien term loan.

SunTrust Robinson Humphrey Inc. is leading the deal, which will be used to refinance existing debt and to fund a distribution so that employees can purchase more equity in the company.

Higginbotham is a Fort Worth, Texas-based insurance brokerage firm.

Genex seeks add-on

Genex Holdings launched without a call and to existing lenders only a fungible $25 million add-on first-lien term loan with original issue discount talk of 99, a market source said.

The add-on, like the existing first-lien term loan, is priced at Libor plus 425 bps with a 1% Libor floor.

Commitments are due at noon ET on Friday, the source continued.

RBC Capital Markets and SunTrust Robinson Humphrey Inc. are leading the deal that will be used to fund an acquisition.

Following the launch of the add-on loan, the company’s existing first-lien term loan was unchanged in trading at 99 bid, par offered, a trader added.

Genex is a Wayne, Pa.-based provider of integrated managed care services, focused on controlling health-care costs and reducing disability expenses.

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