Solera, Michaels break; Movie Gallery dips on numbers; H3C flexes up; NuVox upsizes, trims spread

By Sara Rosenberg

New York, May 11 - Solera Holdings LLC's credit facility freed for trading on Friday, with the U.S. term loan B quoted atop par. Also hitting the secondary was Michaels Stores Inc.'s new term loan, with levels quoted in the upper par region.

And, in other secondary happenings, Movie Gallery Inc.'s term loan B inched lower as the company released weak first-quarter numbers.

Meanwhile, in the primary market, H3C Holdings Ltd. flexed pricing higher on its term loan B tranche and NuVox Communications upsized its term loan, while reducing pricing.

Solera's credit facility allocated and freed for trading on Friday afternoon, with the $230 million U.S. term loan B quoted at par 3/8 bid, par 5/8 offered, according to a market source.

The term loan B is priced at Libor plus 200 bps with a step down to Libor plus 175 bps when leverage hits 3.25 times, but no earlier than 12 months after close.

During syndication, the pricing step down was added to the U.S. term loan B as the deal was oversubscribed.

Solera's approximately $657.5 million amended and restated senior credit facility (B1/B+) also includes a €280 million term loan B priced at Euribor plus 200 bps with a step down to Euribor plus 175 bps when leverage hits 3.25 times, but no earlier than 12 months after close, and an existing $50 million revolver.

During syndication, the pricing step down was added to the euro term loan B.

The specific sizes of the euro and U.S. term loan B tranches were recently firmed up, however, throughout syndication, it was expected that about 60% would be euro and about 40% would be U.S.

Goldman Sachs and Citigroup are the joint bookrunners on the deal, with Goldman the lead arranger.

Proceeds will be used to refinance existing debt, including a $240 million term loan B, a €220 million term loan B, a €165 million second-lien term loan and an €80 million mezzanine financing.

The facility is being done in connection with the company's initial public offering of common stock. On Friday, the company priced its IPO for 26.25 million shares of common stock at $16 per share.

Solera is a San Ramon, Calif., provider of software and services to the automobile insurance claims processing industry.

Michaels frees to trade

Another deal to allocate and break for trading on Friday afternoon was Michaels Stores, with its $2.344 billion covenant-light term loan quoted at par ½ bid, par ¾ offered, according to a fund manager.

The term loan is priced at Libor plus 225 bps with a step down to Libor plus 200 bps if the corporate rating is upgraded to B1, and carries 101 soft call protection for one year.

Deutsche Bank acted as the lead bank on the deal, which was officially completed on Thursday.

Proceeds were to be used to replace an existing term loan of the same size that is priced at Libor plus 275 bps. This existing term loan had been repriced early on in the year from Libor plus 300 bps.

Michaels Stores is an Irving, Texas, specialty retailer of arts, crafts, framing, floral, wall decor and seasonal merchandise for the hobbyist and do-it-yourself home decorator.

Movie Gallery softens on financials

In more trading news, Movie Gallery's term loan B headed lower on Friday after the company announced not-to-positive first-quarter results, according to a trader.

The term loan B ended the day at 99¼ bid, 99¾ offered, down about three eighths of a point from previous levels, the trader said.

For the first quarter, total revenues were $647.7 million, a decrease of 6.7% from $694.4 million in the first quarter of 2006.

Operating income in the quarter was $33.6 million, compared to $67.5 million for the same period last year.

The Dothan, Ala., video rental company reported a net loss of $14.9 million, or $0.47 per share, compared to net income of $40.3 million, or $1.27 per share, in the first quarter of 2006.

And, adjusted EBITDA totaled $63.5 million, compared to $116.8 million in the first quarter of 2006.

H3C ups B loan spread

Moving to the primary, H3C Holdings increased pricing on its $200 million 51/2-year senior secured term loan B to Libor plus 300 bps from original guidance of Libor plus 250 bps to 275 bps, according to a market source.

The company's $430 million in new term loan debt also includes a $230 million 31/2-year term loan A that is priced at Libor plus 200 bps and was primarily syndicated to banks in Asia.

The deal is privately and confidentially rated.

Goldman Sachs is the lead arranger, bookrunner, administrative agent and syndication agent on the loan.

Proceeds will be used to finance a portion of the purchase price for 3Com Corp.'s acquisition of 49% of its China-based joint venture, Huawei-3Com Co., Ltd. from an affiliate of Huawei Technologies.

H3C is an indirect wholly owned subsidiary of 3Com, a Marlborough, Mass.-based provider of secure and converged networking solutions.

NuVox tweaks deal

NuVox came out with some changes to its credit facility, including upsizing its term loan while lowering pricing on the paper by 50 bps, according to a market source.

The seven-year term loan is now sized at $265 million, up from $250 million, and pricing was reverse flexed to Libor plus 325 bps from original talk at launch of Libor plus 375 bps.

Speculation over a potential pricing flex had already been making its way around the market based on the positive investor reception that the deal received.

NuVox's now $275 million (up from $260 million) credit facility (B2/B-) also includes a $10 million six-year revolver.

Goldman Sachs and Wachovia are the lead banks on the deal.

Proceeds will be used to help fund the merger of NuVox and FDN Communications, to refinance both companies' existing senior credit facilities and to pay a dividend.

Of the total $15 million of additional term loan proceeds that are being raised through the upsizing, $7.5 million will be used for extra cash and $7.5 million will be used to increase the dividend payment to $137.5 million from $130 million, the source explained.

The combined company will have headquarters in Greenville, S.C., will operate under the name NuVox Communications and will provide IP-based communications services, including voice, data connectivity and storage, private networking, web hosting and security services to business customers across the Southeast and the Midwest.

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