Canon Communications sets talk; Vanguard near full as price talk rises; Simmons, Covanta free to trade

By Sara Rosenberg

New York, May 23 - Canon Communications LLC came out with price talk on its credit facility as the deal was launched to lenders through a Tuesday bank meeting.

In other primary happenings, Vanguard Car Rental USA Inc. has unofficially lifted price talk on its $800 million seven-year term loan B, bringing the tranche close to subscription.

Meanwhile, in trading, Simmons Bedding Co.'s term loan D and Covanta Energy Corp.'s upsized and repriced term loan hit the secondary on Tuesday, with both deals seeing levels quoted in the mid-par type context.

Canon Communications announced opening price talk on its $168 million credit facility as the deal was presented to lenders through a bank meeting during market hours, according to a source.

The $120 million term loan B was launched to lenders with opening spread guidance of Libor plus 300 to 325 basis points and the $48 million second-lien term loan was launched with opening guidance of Libor plus 675 to 700 basis points, the source said.

Credit Suisse is the lead arranger on the deal that will be used for acquisition financing and for a repricing.

Of the $120 million in first-lien term loan B debt, $35.5 million is the incremental portion, with the remainder being the existing debt that is being repriced from a current interest rate of Libor plus 375 basis points, the source explained.

Of the $48 million in second-lien term loan debt, $15 million is the incremental portion, with the remainder being the existing debt that is being repriced from a current interest rate of Libor plus 750 basis points, the source added.

Canon is a Los Angeles-based producer of print publications, trade shows and digital media for the medical device manufacturing market and allied packaging, plastics and electronics markets.

Vanguard talk drifts up

Vanguard Car Rental unofficially boosted spread guidance on its $800 million seven-year term loan B, resulting in increased lender interest and near subscription levels by Tuesday afternoon, according to a market source.

The term loan B is now being talked at Libor plus 275 to 300 basis points, up from original talk at launch of Libor plus 250 basis points, the source said.

With this unofficial change, the term loan is "75%-plus subscribed, headed towards 100%," the source added.

Vanguard's $975 million credit facility (B2/BB), which just launched on May 12, also contains a $175 million six-year revolver.

Goldman Sachs and JPMorgan are the lead banks on the deal, with Goldman the left lead.

Proceeds from the new credit facility will be used for a recapitalization that will include refinancing existing debt, paying a small dividend and enhancing liquidity.

In the summer of 2005, Vanguard had come to market with credit facility consisting of a $175 million revolver and a $725 million term loan that was going to be used to refinance existing debt as well as to fund a distribution to shareholders.

However, that deal was pulled in August 2005 after being completely reworked to include a $100 million second-lien term loan talked at Libor plus 750 basis points, a downsized $525 million first-lien term loan that saw price talk get as high as Libor plus 500 basis points and the $175 million revolver.

Lehman, Goldman Sachs and Citigroup were acting as the bookrunners on the 2005 deal, with Lehman the left lead.

The new deal is said to be very different in terms of sources and uses, as it is not predominantly a dividend deal.

Vanguard is the Tulsa, Okla., owner and operator of Alamo Rent A Car and National Car Rental.

Simmons breaks atop par

Switching to the secondary, Simmons' $492 million term loan D (BB-) broke for trading on Tuesday, with levels quoted at par 3/8 bid, par 5/8 offered, according to a trader.

The term loan D was used to refinance the company's existing term loan C and repay its senior unsecured term loan.

With this refinancing, Simmons essentially was able to reprice its term loan C at Libor plus 225 basis points from Libor plus 250 basis points.

Goldman Sachs acted as the lead bank on the deal for the Atlanta-based manufacturer of mattresses.

Covanta frees to trade

Covanta Energy's upsized and repriced first-lien term loan B broke for trading on Tuesday as well, with levels quoted at par ¼ bid, par ¾ offered in quiet trading, according to a trader.

The first-lien term loan B was upsized by $140 million and pricing was reduced to Libor plus 225 basis points from Libor plus 300 basis points.

Proceeds from the incremental first-lien debt are being used to repay some of the company's second-lien term loan debt.

Originally, it was only expected that $100 million would be shifted into the first lien from the second lien; however, the syndicate decided to increase that amount by $40 million before allocating the deal late in the day Tuesday, a market source said.

Goldman Sachs is the lead bank on the transaction for the Fairfield, N.J., renewable energy and waste disposal company.

SunGard softens with market

Once again the overall secondary loan market felt weaker, with names generically lower by about an eighth of a point, despite a small increase in volume, according to a trader.

One example is SunGard Data Systems Inc., as its term loan drifted lower to par ½ bid, par 7/8 offered from Monday's closing levels of par 5/8 bid, 101 offered, the trader said.

"There was decent volume. It certainly picked up from yesterday. But things were lower again today. I think a lot of dealers are full of paper," the trader said.

SunGard is a Wayne, Pa.-based provider of integrated software and processing solutions, primarily for financial services.

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