Delta moves up timeline; size may change; Pierre Foods tweaks deal; Dana up with paydown

By Sara Rosenberg

New York, Sept. 21 - Delta Air Lines Inc. changed the commitment deadline on its term loan and there is the potential for a size modification as the company's bond offering may be upsized, and Pierre Foods Inc. revised its term loan and eliminated the retail bank meeting since the deal was oversubscribed through an early syndication round.

In other news, Warner Chilcott plc's credit facility is receiving some strong interest as the banks on the deal are looking for big tickets, and some think that by the time the retail launch takes place, a good portion of the deal will already be spoken for.

Moving to the secondary market, Dana Holding Corp.'s term loan was better on Monday as the company announced plans to repay some bank debt with stock proceeds and Spirit AeroSystems Inc. was unchanged to better on its debt reduction news.

Delta sets new deadline

Delta Air Lines is now asking lenders to get commitments in towards its $500 million four-year term loan by noon ET on Tuesday, whereas originally, the commitment deadline had been set for Wednesday, according to a fund manager.

Official price talk on the loan has still not been announced. The fund manager, however, said that he expects pricing will likely be comparable to where the company's bonds price.

The bonds are being talked in the 10% area and are expected to price on Tuesday afternoon.

As a result of the bond price talk, the fund manager guessed that the term loan may see pricing in the area of Libor plus 700 basis points with an original issue discount of around 98.

As was previously reported, there is a 2% Libor floor on the loan.

Delta may shift sizes

Delta's term loan could see a downsizing if the company ends up increasing the size of its bond offering, a market source said.

Initially, the bond offering was talked at $500 million, but now it is being guided in a range of $500 million to $750 million, the source remarked.

Proceeds from the term loan, along with the new senior secured notes, will be used to repay borrowings under Northwest Airlines Inc.'s senior corporate credit facility.

Any remaining net proceeds will be used for general corporate purposes.

Delta's proposed credit facility also includes a $500 million 31/2-year revolver that is not being marketed at the moment.

Citigroup and Deutsche Bank are the joint lead arrangers and bookrunners on the deal.

Delta is an Atlanta-based airline company.

Pierre revises loan

Pierre Foods came out with some changes to its term loan (BB-), including increasing the size and reducing the original issue discount, according to a market source.

The five-year term loan is now sized at $160 million, up from $145 million, and the original issue discount is now 97, down from 96, the source said.

Pricing on the term loan remained at Libor plus 600 bps with a 2.5% Libor floor.

In addition, the bank meeting that was scheduled for Tuesday to launch the deal to retail investors was cancelled since the few "big guys" that the loan was shopped to early strongly oversubscribed the transaction.

Amortization on the loan is 5% in years one and two, 10% in years three and four and 70% in year five.

Allocations are expected to go out on Tuesday or Wednesday, the source added.

Pierre refinancing existing debt

Proceeds from Pierre Foods' term loan will be used to refinance loans that the company's owner, Oaktree Capital Management LP, has in place.

Deutsche Bank is the lead bank on the new term loan.

In addition, the company is getting a $30 million revolver that is being led by Wells Fargo Foothill.

Pierre Foods is a Cincinnati, Ohio-based producer of fully cooked beef, pork, chicken, turkey, peanut butter and bakery products for school, foodservice, retail, vending and convenience store markets.

Warner Chilcott catching interest

Market buzz is that Warner Chilcott's $2.75 billion senior secured credit facility has got a lot of momentum as the lead banks on the transaction have approached lenders for big tickets, according to a market source.

"Investors have already spoken that they want to play in size. It's not actually an agent round. It's some of those larger investors that may play inside the loan. I think by the time the retail launch rolls around, a good portion of the B might be done," the source remarked.

A retail launch for the credit facility has not yet been set, the source continued.

Bank of America and Credit Suisse are the co-lead arrangers on the deal. Bookrunners are Bank of America, Credit Suisse, Barclays, Citigroup, JPMorgan and Morgan Stanley. Credit Suisse is the administrative agent.

The banks have committed to provide 16 2/3% of the credit facility.

Warner Chilcott loan details

Warner Chilcott's credit facility, as outlined by a commitment letter filed with the Securities and Exchange Commission, consists of a $250 million five-year revolver priced at Libor plus 350 bps, a $1 billion five-year term loan A priced at Libor plus 350 bps and a $1.5 billion 51/2-year term loan B priced at Libor plus 375 bps.

All tranches will carry a 2.5% Libor floor.

Up to $350 million of the term loan A and/or the term loan B can be available as a 180-day delayed-draw loan. If the delayed-draw is not needed, the company expects to raise a total of $2.15 billion of term loan A and term loan B debt, as opposed to $2.5 billion.

The revolver has a 75 bps commitment fee and the delayed-draw term loan commitment fee will be half of the drawn spread.

Warner Chilcott OID may come tighter

According to the commitment letter, Warner Chilcott's term loan A and term loan B are expected to be offered to lenders at an original issue discount of 98.

However, the source said that the original issue discount on the term loan B has been rumored to be talked to some investors at 98½ during this "big ticket" round.

Financial covenants under the facility include a maximum leverage ratio opening at 4.25 times and decreasing until it reaches 2.5 times after Sept. 30, 2013, and an interest coverage ratio that opens at 2.0 times and increases until it reaches 3.0 times after Sept. 30, 2013.

Proceeds will be used to refinance the company's existing credit facility and to fund the purchase of Procter & Gamble Co.'s pharmaceuticals business for $3.1 billion.

Other funds for the refinancing and acquisition will come from the sale of $1.4 billion of senior unsecured notes, which are backed by a $1.4 billion one-year bridge loan priced at Libor plus 800 bps with a 2.5% Libor floor. The spread increases by 50 bps after each three-month period.

The transaction is expected to close in the fourth quarter, subject to regulatory approvals, the receipt of proceeds of the financing, the delivery of audited financial statements for the pharmaceuticals business and other customary conditions.

Warner Chilcott is a Rockaway, N.J.-based specialty pharmaceutical company.

Skype timing still undecided

Skype Technologies SA has yet to set a bank meeting date for its proposed credit facility, and according to sources, it now looks unlikely that the deal will launch this week as was previously hoped.

The credit facility is expected to consist of a roughly $600 million term loan and a revolver. The size of the revolver is not yet public and it's possible that the revolver will not be syndicated.

JPMorgan, Barclays and RBC Capital Markets are the lead banks on the deal.

Proceeds will be used to help finance the purchase of a 65% stake in the company by an investor group led by Silver Lake and including Index Ventures, Andreessen Horowitz and the Canada Pension Plan Investment Board.

Other funds for the buyout will come from equity from both the buying group and the seller.

eBay Inc., the current owner of Skype, will retain a 35% interest in the company. eBay is expected to receive about $1.9 billion in cash upon the completion of the sale and a subordinated note from the buyer in the principal amount of $125 million.

The acquisition, which is not subject to a financing condition, is expected to close in the fourth quarter.

Skype is a Luxembourg-based software that enables individuals and businesses to make free video and voice calls, send instant messages and share files with other Skype users.

Dana better on paydown

Switching to trading happenings, Dana's term loan gained some ground following news that a portion of the debt will be repaid with proceeds from the sale of 27 million shares of common stock, according to a trader.

Specifically, the company expects to receive roughly $160 million in net proceeds from the offering, and will, therefore, repay about $80 million of the term loan since the credit agreement requires that 50% of the stock proceeds go towards a paydown.

Remaining proceeds will be used for general corporate purposes, including flexibility for future expansion and restructuring of operations.

Dana is a Toledo, Ohio-based supplier of components, modules and systems to vehicle manufacturers and related aftermarkets.

Spirit AeroSystems steady to stronger

Spirit AeroSystems term loan was unchanged to higher, depending on which trader was asked, as the company revealed that it will be repaying borrowings under its senior secured revolving credit facility.

Traders agreed that the term loan was quoted at 96 bid, 97 offered on Monday. However, one trader had the loan at that same level on Friday, while a second trader had the loan at 94 bid, 96 offered on Friday.

Funds for the revolver paydown will come from the sale of $300 million of senior notes.

Remaining proceeds from the offering will be used for general corporate purposes.

Spirit AeroSystems is a Wichita, Kan., supplier of commercial airplane assemblies and components.

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