Skilled Healthcare rises; Tomkins sets launch, reveals structure; Oshkosh deal emerges

By Sara Rosenberg

New York, Sept. 3 - Skilled Healthcare Group Inc.'s term loan headed higher during a quiet pre-holiday trading session, as the company's court case was once again postponed while settlement discussions continue.

Over in the primary market, Tomkins plc came out with a bank meeting date for its proposed credit facility, and at the same time, size and structure were disclosed as well, but price talk was left as still to be determined.

Meanwhile, Oshkosh Corp. surfaced with new deal plans.

The Tomkins and Oshkosh deals joined the fairly large calendar that has already been built for the first two days after the Labor Day holiday, and includes deals such as Advance Pierre Foods, Valeant Pharmaceuticals International Inc., NBTY Inc. and AbitibiBowater Inc.

Skilled Healthcare moves up

Skilled Healthcare's term loan was quoted in the secondary market on Friday at 95 bid, 96 offered, up from 93¾ bid, 94¾ offered, according to a trader, as the company's court case was postponed again.

The case is now slated to begin on Wednesday after being delayed from Friday and prior to that, from Thursday, and before that from Aug. 31.

As was previously reported, in 2006, parties alleged that certain of the company's California-based facilities were understaffed and misrepresented the quality of care provided in their facilities.

Then in July, a jury ruled that the company should pay $613 million in statutory damages and $58 million in restitutionary damages to the plaintiffs, and before the punitive damages phase of the trial went on, the parties agreed to enter into mediation to settle the lawsuit.

The Foothill Ranch, Calif.-based health care services company later filed for mistrial or new trial on grounds of juror misconduct, but that motion was denied.

Tomkins timing surfaces

Moving to the primary, Tomkins nailed down timing on the launch of its credit facility with the scheduling of a bank meeting for Wednesday - whereas before it was simply labeled as post-Labor Day business - and revealed that the total facility size will be $1.6 billion, according to sources.

Tranching on the deal includes a $300 million revolver, a $300 million term loan A and a $1 billion term loan B, sources said.

Citigroup, Bank of America, Barclays Capital, RBC Capital Markets and UBS Securities are the lead banks on the deal, with Citigroup the left lead.

Proceeds will be used to help fund the acquisition of the company Pinafore Acquisitions Ltd., a company jointly owned by Onex Corp. and Canada Pension Plan Investment Board, for 325p per share in cash. The acquisition values the company's existing issued and to-be-issued share capital at £2.89 billion.

Tomkins selling notes

In addition to the credit facility, Tomkins plans on issuing $600 million of secured bonds and $1 billion of second-lien bonds for buyout financing, and obtaining about $2.2 billion of equity, sources remarked.

Previously, all that was known on the debt was that the company had received a commitment for $3.2 billion and that this amount would come in the form of loans and bonds, but a breakdown had been unavailable.

The bonds are being led by the same banks that are on the credit facility, but Bank of America is the left lead.

The acquisition will be implemented by way of a court-sanctioned scheme of arrangement under Part 26 of the UK Companies Act 2006 and is subject to shareholder approval, which was obtained in late August. Closing is expected to take place on Sept. 24.

Tomkins is a London-based engineering and manufacturing group, providing products for the industrial, automotive and building products markets.

Oshkosh coming to market

Word emerged that Oshkosh will be holding a bank meeting on Wednesday to launch a proposed credit facility that will be marketed to banks, according to a market source.

Bank of America and JPMorgan are the lead banks on the loan refinancing deal.

The facility will include a new term loan A, the source said.

Oshkosh is an Oshkosh, Wis.-based designer, manufacturer and marketer of a broad range of specialty access equipment, commercial, fire & emergency and military vehicles and vehicle bodies.

Advance Pierre also on tap

Also set to launch on Wednesday is Advance Pierre Foods' $1.14 billion credit facility that is comprised of a $75 million ABL revolver, an $835 million first-lien term loan (B1) and a $230 million second-lien term loan.

Credit Suisse, Barclays Capital, Morgan Stanley and BMO Capital Markets are the lead banks on the deal that will be used to fund the creation of the company through the merger of Pierre Foods Inc., Advance Food Co. Inc. and Advance Brands LLC.

Following completion of the merger, Oaktree Capital Management, the current majority shareholder of Pierre Foods, will maintain a majority share of the combined company. The current shareholders of Advance Food, the Allen and McLaughlin families, will own a minority share of the combined company.

Advance Pierre Foods will be a Cincinnati-based supplier of value-added protein and handheld convenience food products to the foodservice, school, retail, club, vending and convenience store channels.

Valeant coming too

And, yet another deal slated for Wednesday is Valeant Pharmaceuticals' proposed $3.022 billion senior secured credit facility that is being led by Goldman Sachs, Morgan Stanley and Jefferies.

According to the commitment letter, the deal consists of a $250 million 41/2-year revolver, a $500 million five-year term loan A, an up to $1.972 billion six-year term loan B and a $300 million delayed-draw six-year term loan B that is available until the earlier of Dec. 31 or 60 days after closing.

However, filings with the Securities and Exchange Commission also disclosed that, if necessary, the banks can convert the entire term loan A into the term loan B or split the term loans into multiple tranches, including a senior unsecured tranche, a senior second-lien tranche or a tranche of debt securities.

In addition, the banks can reduce the tenor of the term loan to 4½ years, the tenor of the term loan B to five years and the tenor of the revolver to four years.

Official structure and pricing on the deal are expected to surface at the bank meeting, a market source told Prospect News.

Valeant potential pricing

Regarding pricing, Valeant's commitment letter outlined the spread on the revolver and the term loan A at Libor plus 450 bps, and the spread on the term loan B at Libor plus 475 bps.

The letter went on to say that if the credit facility is rated at least Ba3/BB-, pricing on the revolver and term loan A is expected at Libor plus 425 bps, and pricing on the term loan B is expected at Libor plus 450 bps. Additionally, if the rating is B2/B, pricing on the revolver and term loan A is expected at Libor plus 525 bps, and pricing on the term loan B is expected at Libor plus 550 bps.

But, the banks were given wiggle room with pricing as well. During syndication, the weighted average interest rate can be increased by up to 275 bps if the facility closing date occurs prior to Dec. 15 or up to 375 bps if the closing date occurs on or after Dec. 15.

As committed, the term loan B has a 1.75% Libor floor and a $250 million accordion feature, the revolver has a 75 bps commitment fee and the delayed-draw term loan B has a 75 bps ticking fee. The banks can add 102, 101 soft call protection to the term loan B tranche if necessary.

Valeant merging with Biovail

Proceeds from Valeant's credit facility will be used to fund a merger with Biovail Corp. and refinance existing debt, including Valeant's 7.625% and 8.375% senior unsecured notes.

Under the agreement, Valeant stockholders will receive a one-time special cash dividend of $16.77 per share immediately prior to closing of the merger and 1.7809 shares of Biovail common stock upon closing of the merger in exchange for each share of Valeant common stock they own.

The transaction is expected to close before year-end, subject to Valeant and Biovail stockholder approval, which will be sought at a special meeting on Sept. 27, and regulatory approvals.

As part of the transaction, Valeant expects to offer all stockholders of the merged company an additional one-time $1 per share special dividend by Dec. 31, which will be funded through the delayed-draw term loan B.

Aliso Viejo, Calif.-based Valeant and Mississauga, Ont.-based Biovail are specialty pharmaceutical companies. The combined company will be based in Mississauga.

NBTY launching Tuesday

The first day back from the long weekend will be eventful as well, as NBTY is scheduled to hold a bank meeting on Tuesday for its proposed $1.7 billion senior secured credit facility (Ba3/BB) comprised of a $200 million revolver, a $200 million term loan A and a $1.3 billion term loan B.

Barclays, Bank of America and Credit Suisse are the lead banks on the deal that will be used to help fund the buyout of the company by the Carlyle Group for $55.00 per share in cash. The transaction is valued at $3.8 billion.

Other funding for the acquisition will come from $900 million of senior unsecured notes, which are backed by a bridge loan commitment, and up to $1.6 billion in equity.

Closing on the transaction is expected to occur before the end of the year, subject to customary conditions, including approval of NBTY stockholders, which will be sought at a special meeting on Sept. 22, and regulatory approvals. It is not subject to any financing condition.

NBTY pro rata marketed

NBTY's revolver and term loan A were already launched to banks on Aug. 11, and commitments were due in late August.

Banks were being offered the revolver and the term loan A with upfront fees that are based on commitment size, and price talk on the tranches is Libor plus 425 bps with a 1.75% Libor floor.

There is no official talk out on the term loan B until the bank meeting. It is, however, expected to come wider than the pro rata debt. There have been some rumors floating around that the B loan is guided in the Libor plus 450 bps to 475 bps area with a 1.75% Libor floor and an original issue discount of 98 to 981/2, but the source said that until ratings come out, no official talk will be available.

NBTY is a Ronkonkoma, N.Y.-based manufacturer and marketer of nutritional supplements.

AbitibiBowater readying launch

Also slated for Tuesday is AbitibiBowater's proposed $600 million four-year asset-based revolving credit facility that will be used for exit financing.

Citigroup, Barclays and JPMorgan are the lead banks on the deal. Each bank has committed to provide $100 million of the facility and the remaining $300 million will be syndicated.

The company also plans on selling $750 million of notes to fund its emergence, but there is also the option to get some term loan debt in place of the notes.

AbitibiBowater is a Montreal-based producer of newsprint, commercial printing papers, market pulp and wood products.

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