ServiceMaster tweaks deal; Orbitz sets talk; Intertape dead; Medical Staffing firms spreads; LCDX down

By Sara Rosenberg

New York, June 29 - The ServiceMaster Co. came out with official changes to its credit facility on Friday, including retranching the deal, increasing pricing, and adding an original issue discount and soft call protection to the term loan B.

In other primary news, Orbitz Worldwide Inc. released price talk on its credit facility as the deal was launched with a bank meeting on Friday, Intertape Polymer Group Inc. pulled its facility from market because shareholders rejected the company's buyout offer and Medical Staffing Network Holdings Inc. firmed up pricing on its first-lien debt at the high end of revised guidance.

Moving to the secondary market, LCDX continued to slide lower and Bank of America emerged as the winner in a portfolio auction.

ServiceMaster made a round of changes to its credit facility that included upsizing the term loan B, while adding an original issue discount and soft call protection; eliminating the pre-funded synthetic letter-of-credit facility; and flexing pricing higher on both the term loan B and the revolver, according to a market source.

The seven-year covenant-light term loan B is now sized at $2.85 billion, up from $2.65 billion, pricing was increased to Libor plus 300 basis points from initial talk of Libor plus 225 bps, and a step up to Libor plus 325 bps effective when senior secured leverage is greater that 6.5 times was added, the source said.

Senior secured leverage is currently around 5.7 times.

In addition, the term loan B is now being sold at a discount that is talked at 98 to 98¼ and it now has 101 soft call protection for one year.

On Thursday, talk was circulating that the term loan B would undergo some changes, with some expecting a flex to Libor plus 275 bps, an original issue discount of 98½ to 99 and 101 soft call protection for one year.

In response to the term loan B upsizing, the $200 million seven-year pre-funded synthetic letter-of-credit facility was eliminated from the capital structure, the source continued.

As for the $500 million six-year covenant-light revolver, pricing on the tranche was flexed up to Libor plus 300 bps from initial talk of Libor plus 225 bps as well, the source remarked.

Last on the list of changes is that the $400 million accordion feature was removed from the credit agreement and the company's Landcare business is now a restricted subsidiary, the source added.

Citigroup, JPMorgan, Bank of America, Goldman Sachs and Morgan Stanley are the lead banks on the $3.35 billion senior secured credit facility (B1/B+).

Proceeds will be used to help fund the leveraged buyout of the company by Clayton, Dubilier & Rice, Inc. for $15.625 in cash per share. The total enterprise value is $5.5 billion, including the assumption of existing ServiceMaster debt.

ServiceMaster is a Downers Grove, Ill., provider of services to residential and commercial customers, including lawn care and landscape maintenance, termite and pest control, home warranties, disaster response and reconstruction, cleaning and disaster restoration, house cleaning, furniture repair and home inspection.

Orbitz price talk

Orbitz held a bank meeting on Friday to kick off syndication on its proposed $800 million senior secured credit facility, and in connection with the launch, price talk was announced, according to a market source.

The $600 million seven-year term loan, the $125 million six-year synthetic letter-of-credit facility and the $75 million six-year revolver were all presented to lenders with talk of Libor plus 250 bps, the source said.

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

The deal is being done in connection with the company's initial public offering of common stock.

Proceeds from the credit facility, along with IPO proceeds, will be used to fund a dividend to parent company Travelport Ltd.

Travelport plans to use the proceeds from the payment to repay a portion of its senior credit facility debt.

Orbitz is a Chicago-based online travel company.

Intertape cancelled

Intertape Polymer Group's $460 million credit facility has been pulled from market as the company's buyout by Littlejohn & Co. LLC was rejected by shareholders, by a vote of almost 70%, resulting in the termination of the agreement, according to a market source.

The credit facility consisted of a $60 million six-year revolver (B2/B+) talked at Libor plus 275 bps, with a 50 bps commitment fee, a $280 million seven-year first-lien term loan B (B2/B+) talked at Libor plus 275 bps, and a $120 million 71/2-year second-lien term loan (Caa2/CCC+) talked at Libor plus 575 bps, with call protection of 102 in year one and 101 in year two.

Citigroup and Deutsche Bank were acting as the lead banks on the deal, with Citi the left lead.

Littlejohn was offering to buy the company for $4.76 per share in cash. Including net debt outstanding, the total transaction value was about $500 million.

Intertape is a Saint Laurent, Quebec, developer, manufacturer and seller of polyolefin films, paper and film pressure-sensitive tapes and complementary packaging systems.

Medical Staffing finalizes spreads

Medical Staffing Network finalized pricing on its credit facility, with the revolver and first-lien term loan B ending up at the wide end of modified talk, according to a market source.

The $30 million six-year revolver and the $100 million six-year first-lien term loan B are now both priced at Libor plus 350 bps, compared with revised talk of Libor plus 325 bps to 350 bps and original talk at launch of Libor plus 275 bps to 300 bps, the source said.

The company's $25 million seven-year second-lien term loan ended up at Libor plus 600 bps, in line with initial talk.

The second-lien term loan carries call protection of 101 for one year.

General Electric Capital Corp. is the lead bank on the $155 million senior secured deal.

Proceeds will be used to fund the $92 million cash acquisition of InteliStaf Holdings Inc., to refinance Medical Staffing Network's existing debt and to provide for working capital and general company purposes.

Medical Staffing Network is a Boca Raton, Fla., provider of per diem nurse staffing services. InteliStaf is an Oakbrook Terrace, Ill., health care staffing company.

Dollar General retranches

Dollar General Corp. revised its seven-year term loan B by dividing it into a first out piece and a first loss piece and downsizing it to $2.3 billion from $2.43 billion, according to a market source.

The first out sub-tranche is sized at $1.7 billion, carries pricing of Libor plus 275 bps and was sold at an original issue discount of 97, the source said.

The first loss sub-tranche is sized at $600 million, carries pricing of Libor plus 275 bps and was sold at an original issue discount of 95, the source added.

At launch, the term loan B had been talked at Libor plus 250 bps to 275 bps with no discount.

Prior to the changes, the term loan B was rated B3/B+.

Dollar General's now $3.3 billion (down from $3.43 billion) senior secured credit facility also includes a $1 billion six-year asset-based revolver that is priced at Libor plus 150 bps, with a 37.5 bps undrawn fee.

Goldman Sachs, Citigroup, Lehman Brothers and Wachovia are the joint lead arrangers and joint bookrunners on the credit facility. CIT Corp. is the administrative agent for the asset-based revolver.

Proceeds will be used to help fund the buyout of Dollar General by Kohlberg Kravis Roberts & Co. LP for $22.00 in cash per share.

Dollar General is a Goodlettsville, Tenn., discount retailer.

Appleseed's tweaks deal

Appleseed's Topco Inc. revised its credit facility, increasing pricing on the first-lien term loan for a second time, downsizing the second-lien term loan, adding a new holdco loan and adding two new covenants, according to a market source.

The $335 million first-lien term loan is now priced at Libor plus 400 bps, up from revised talk of Libor plus 350 bps and from original talk of Libor plus 300 bps, the source said.

In addition, 101 soft call protection for one year was added to the first-lien term loan, the source continued.

Meanwhile, the second-lien PIK toggle term loan is now sized at $200 million, down from $250 million, with pricing left unchanged at Libor plus 575 bps cash pay, stepping up by 75 bps if PIK is elected.

To compensate for the second-lien downsizing, a new $50 million holdco loan was added to the capital structure, the source remarked.

With this retranching, combined with some other factors, opco leverage went down to around 5.4 times from around 6.1 times.

Lastly, a minimum EBITDA and a maximum senior leverage covenant was added to the credit agreement, joining the total leverage covenant that the deal was launched with, the source added.

The company's $710 million credit facility also includes a $125 million ABL revolver priced at Libor plus 175 bps.

UBS and American Capital Strategies are the lead banks on the deal.

Proceeds will be used to back the already completed acquisition of Blair Corp., a Warren, Pa.-based apparel and home products company, for $42.50 per share in cash.

Appleseed's Topco, a portfolio company of Golden Gate Capital, is a marketer of apparel and home products.

LCDX weakens again

Switching to trading news, LCDX continued its grind lower during the session as general market weakness remained the name of the game, according to traders.

The index ended the day at 97.70 bid, 97.80 offered, down from Thursday's levels of 98.05 bid, 98.15 offered, traders said.

In addition, LCDX got as low as 97.65 bid, 97.75 offered early on in the day before rebounding slightly, traders added.

Bank of America wins auction

Also in the secondary, Bank of America came out as the winner for an $81 million loan portfolio auction on Friday, according to a trader.

The portfolio consisted of 40 different issuers, the trader said.

The cover bid was 99.8, the trader added.

Transeastern heads higher

Transeastern's term loan strengthened considerably on Friday after news emerged that a settlement agreement has been reached with Technical Olympic USA Inc., under which Transeastern's bank debt will be repaid in full, according to a trader.

Transeastern's term loan ended the day at 105 bid, 106 offered, up from 99½ bid, par ½ offered, the trader said, adding that the paper traded that high because it will get taken out at 105.7.

Technical Olympic's revolver was also better on the settlement news, with levels going out at 97 bid, 97¾ offered, unchanged to up about a half a point, the trader added.

As part of the settlement, Transeastern, a joint venture between Technical Olympic and Falcone Group, will become wholly owned by Technical Olympic and merged into one of its subsidiaries.

To fund the Transeastern senior debt repayment, Technical Olympic will come to market in July with $500 million in new term loan debt comprised of a $200 million first-lien term loan and a $300 million second-lien term loan.

Citigroup is the lead arranger, bookrunner and administrative agent on the deal.

In addition, as a condition to the new deal, the company's existing revolving credit facility will be amended and restated to reduce the size to $700 million from $800 million and allow for the new bank debt.

Also under the settlement, Transeastern's senior mezzanine lenders and junior mezzanine lenders will release Technical Olympic from its obligations.

The senior mezzanine lenders will get $20 million in 14.75% senior subordinated PIK election notes due 2015 and 8% series A convertible preferred PIK preferred stock.

The junior mezzanine lenders will get warrants to purchase shares of Technical Olympic common stock. The warrants will have an estimated fair value of $16.25 million at issuance.

The settlement is expected to close on or about July 31.

Technical Olympic is a Hollywood, Fla., designer, builder and marketer of single-family residences, town homes and condominiums.

Surgical Care closes

Texas Pacific Group completed its acquisition of HealthSouth Corp.'s surgery division, which was renamed Surgical Care Affiliates, according to a company news release.

To help fund the transaction, Surgical Care Affiliates got a new $480 million credit facility (Ba3/B) consisting of a $125 million revolver and a $355 million term loan B, with both tranches priced at Libor plus 225 bps.

JPMorgan and Goldman Sachs acted as the lead banks on the deal.

Surgical Affiliates is a Birmingham, Ala.-based network of 137 outpatient surgery centers and three surgical hospitals.

Atlas Energy closes

Atlas Energy Operating Co., LLC closed on its new $850 million five-year revolving credit facility on Friday, according to an 8-K filed with the Securities and Exchange Commission.

JPMorgan acted as the sole lead arranger and bookrunner on the deal.

Pricing on the revolver can range from Libor plus 100 bps to 225 bps based on usage.

At close, $713.9 million was drawn under the facility to help fund the acquisition of DTE Gas & Oil Co. and to repay debt under the company's prior revolver.

Atlas is a Moon Township, Pa., energy company.

Varietal Distribution closes

Madison Dearborn Partners LLC, through newly formed company Varietal Distribution Holdings, LLC, completed its acquisition of VWR International Inc. from Clayton, Dubilier & Rice, Inc. for a cash merger consideration of $2.196 billion, less certain transaction expenses and subject to certain other adjustments, according to a news release.

To help fund the transaction, Varietal Distribution got a new $1.665 billion senior secured credit facility (B1/B+) consisting of a $250 million six-year revolver at Libor plus 250 bps, a $615 million seven-year term loan B at Libor plus 250 bps and an $800 million euro equivalent seven-year term loan B at Libor plus 250 bps.

During syndication, the U.S. term loan B was downsized by $100 million and the euro term loan B was upsized by $100 million.

Bank of America, Goldman Sachs and JPMorgan acted as the lead banks on the deal.

VWR is a West Chester, Pa., distributor of laboratory products.

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