IAP reworks loan structure; Primedex pulls deal; Merrill, Harlan, Springs Window free to trade

By Sara Rosenberg

New York, Dec. 21 - IAP Worldwide Services Inc. finalized structure on its downsized credit facility that now has a bigger-than-expected first-lien term loan tranche, smaller-than-expected second-lien term loan and revolver tranches and higher-than-expected second-lien pricing.

Also in primary happenings, Primedex Health Systems Inc. pulled its credit facility from the market citing market conditions as the impetus behind the decision.

In secondary doings, Merrill Corp. hit the secondary, with its term loan trading up to the 101-plus level from the high-pars during market hours. Harlan Sprague Dawley Inc. allocated and freed for trading on Wednesday as well, with its term loan closing the session wrapped around 101, up from its plus-par breaking levels. And, Springs Window Fashion Inc. broke for trading with levels quoted right atop par.

IAP Worldwide Services scaled back the overall size of its credit facility by $65 million as the first-lien term loan upsizing announced Wednesday morning did not completely compensate for the second-lien term loan and revolver downsizings that were announced at the same time, according to a buyside source.

Furthermore, as the final round of changes was made, pricing on the second-lien term loan was increased and an original issue discount was added to the tranche.

IAP's first-lien term loan is now sized at $415 million, up from an original size of $350 million, with pricing on the tranche remaining at Libor plus 300 basis points, the source said.

And, the company's revolver is now sized at $75 million, down from an original size of $100 million, with pricing on this tranche also remaining at Libor plus 300 basis points.

Ratings on the first-lien loans are expected to drop to B2/B from original ratings of B1/B+ because of the increase in the amount of first-lien debt in the capital structure, the source continued.

Meanwhile, the company's second-lien term loan is now sized at $120 million, down from an original size of $225 million, pricing was flexed up to Libor plus 800 basis points from Libor plus 750 basis points and a 50 basis point original issue discount was added to the tranche.

The increase in second-lien pricing that was announced Wednesday was the second increase made since the deal first launched. Last week, the second-lien spread was upped to Libor plus 750 basis points from Libor plus 575 basis points.

Reasoning for the first flex up in second-lien pricing was said to be that ratings came in lower-than-expected at Caa1/B-. Now that the amount of second-lien debt being obtained by the company has come down from original plans the ratings on this loan are expected to come up to B3/B-, but pricing still had to come up again for the deal to get done, the source added.

Second-lien call protection is 102 in year one and 101 in year two - the same premiums that were present since launch.

Goldman Sachs and Deutsche Bank are the lead banks on the now $610 million credit facility, with Goldman the left lead.

Proceeds from the facility will be used to refinance existing debt and to fund a dividend payment. The size of the planned dividend payment was reduced by $40 million with the decision to reduce total term loan debt by $40 million.

IAP Worldwide Services is a Cape Canaveral, Fla., provider of logistic services to public and private sector companies and government agencies.

Primedex terminates deal

Primedex Health Systems cancelled its in-market $180 million senior secured credit facility blaming market conditions for the decision, according to an 8-K filed with the Securities and Exchange Commission Wednesday.

The company explained that it had been advised by its lead banks that the loan would not be able to syndicate successfully "on terms and pricing that would be acceptable" to Primedex and therefore, the company followed the banks' "advice and recommendation to terminate the pursuit of this financing at this time," the filing said.

The facility consisted of a $10 million revolver (B3/B), a $125 million first-lien term loan (B3/B) and a $45 million second-lien term loan (Caa2/CCC+).

Morgan Stanley and Bear Stearns were acting as joint lead arrangers and joint bookrunners on the deal, with Morgan Stanley the left lead.

Proceeds were going to be used to refinance substantially all of the company's existing debt and to fund ongoing working capital and general corporate needs.

Primedex is a Los Angeles-based operator of outpatient diagnostic imaging facilities.

Merrill tops 101

Merrill broke for trading during the session, with the $475 million seven-year term loan quoted around par ½ bid, 101 offered on the open and then moving up to 101 bid, 101¼ offered, where it closed the session, according to a trader.

The term loan is priced with an interest rate of Libor plus 225 basis points after reverse flexing from Libor plus 250 basis points during syndication. Furthermore, the syndicate added a step down to the tranche under which pricing can drop to Libor plus 200 basis points if the company meets a specified leverage test.

Merrill's $535 million credit facility (B1/B+) also contains a $60 million five-year revolver with an interest rate of Libor plus 250 basis points.

Credit Suisse First Boston and Bank of America are joint lead arrangers on the deal, with CSFB the left lead.

Proceeds will be used to fund the acquisition of WordWave Inc. from Berkshire Partners LLC and Highland Capital Partners.

Merrill is a St. Paul, Minn., provider of electronic and paper document and information management services. WordWave is a provider of litigation support, court reporting, captioning and transcription services for law firms, courts, governmental agencies and corporations.

Harlan breaks

Harlan Sprague Dawley freed for trading on Wednesday with its $160 million six-year term loan quoted at par ½ bid, par ¾ offered on the open and then moving up to par 7/8 bid, 101 1/8 offered, where it closed the session, according to a trader.

The term loan is priced with an interest rate of Libor plus 250 basis points. Pricing on the tranche was flexed down from Libor plus 275 basis points during syndication.

Harlan's $190 million credit facility (B2/B+) also contains a $15 million five-year dollar-denominated revolver and a $15 million five-year euro-equivalent revolver, with both tranches priced at Libor plus 225 basis points and carrying a 37.5 basis point commitment fee. Pricing on the revolver was reverse flexed from Libor plus 250 basis points during syndication.

UBS and Credit Suisse First Boston are the lead banks on the deal that will be used to help finance Genstar Capital LLC's acquisition of the company.

Harlan is an Indianapolis-based provider of laboratory animals and services to support the scientific community.

Springs Window trades atop par

Springs Window broke for trading late in the day Wednesday, with levels on its $250 million term loan quoted at par bid, par ½ offered, according to a market source.

The term loan is priced with an interest rate of Libor plus 275 basis points. Pricing on the tranche was flexed up from Libor plus 225 basis points during syndication.

The company's $350 million credit facility (B1) also contains a $100 million revolver with an interest rate of Libor plus 275 basis points.

JPMorgan and Wachovia are the lead banks on the Middleton, Wis., window treatment company's deal.

Proceeds will be used to help fund the spinoff of the company from Springs Industries Inc. In October, Springs Industries and Brazilian-based Coteminas announced that they would be combining their home textile businesses in a joint venture named Springs Global. As a result of the joint venture, Springs Window is being spun-off.

Hertz closes

Clayton, Dubilier & Rice Inc., The Carlyle Group and Merrill Lynch Global Private Equity completed the acquisition of The Hertz Corp. from Ford Motor Co. in a transaction valued at $15 billion.

To help fund the acquisition, Hertz got a new $3.85 billion credit facility consisting of a $1.6 billion asset-based revolver (Ba2/NA/BBB) with an interest rate of Libor plus 200 basis points, a $1.707 billion funded term loan (Ba2/NA/BBB-) with an interest rate of Libor plus 225 basis points and a step down to Libor plus 200 basis points upon the company meeting a leverage test, a $250 million letter-of-credit facility (Ba2/NA/BBB-) with an interest rate of Libor plus 225 basis points and a step down to Libor plus 200 basis points upon the company meeting a leverage test, and a $293 million delayed-draw term loan (Ba2/NA/BBB-) with a 112.5 basis point ticking fee that will carry the same terms and pricing as the other term loan debt once it is funded.

During syndication, pricing on the revolver was reverse flexed from Libor plus 225 basis points, and pricing on the term loan and letter-of-credit facility was reverse flexed from Libor plus 250 to 275 basis points with the addition of the step down.

In addition, the $293 million delayed-draw piece was carved out of the originally $2 billion funded term loan tranche because $293 million of bonds were not redeemed in the company's tender offer.

Deutsche Bank, Lehman Brothers and Merrill Lynch acted as the lead banks on the deal, with Deutsche the left lead.

Hertz is a Park Ridge, N.J., vehicle rental organization.

American Reprographics closes

American Reprographics Co. closed on its $157.5 million (Ba3/BB-) first-lien term loan add-on Wednesday that's priced with an interest rate of Libor plus 175 basis points, according to an 8-K filed with the Securities and Exchange Commission.

Proceeds were used to repay second-lien debt.

Goldman Sachs acted as the lead arranger and bookrunner on the deal.

American Reprographics is a Glendale, Calif.-based reprographics company.

Clear Channel closes

Clear Channel Communications Inc. completed its 100% spinoff of Clear Channel Entertainment (SFX Entertainment Inc.) into a newly independent company that will now be known as Live Nation, according to a company news release.

To help back the spinoff, the company got a new $575 million senior secured credit facility (B1/B+) consisting of a $250 million 61/2-year revolver with an interest rate of Libor plus 175 basis points and a its $325 million 71/2-year term loan B with an interest rate of Libor plus 225 basis points.

Pricing on the term loan came up from Libor plus 175 basis points during syndication.

JPMorgan and Bank of America acted as the lead banks on the deal, with JPMorgan the left lead.

Clear Channel Entertainment is a Houston-based producer and promoter of live entertainment.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.