Secure Computing firms up pricing; Sonic books overfill; HealthSouth trades up

By Sara Rosenberg

New York, Aug. 29 - Secure Computing Corp. firmed up spreads on its credit facility at the low end of original guidance based on market demand. Also in the primary, Sonic Corp.'s credit facility is oversubscribed, leading some to speculate on where pricing will fall out.

In secondary happenings, HealthSouth Corp.'s term loan B inched a little higher during market hours on no specific news.

Secure Computing has finalized pricing on all tranches under its $110 million senior secured credit facility (B2/B) at Libor plus 325 basis points, the tight end of original talk at launch of Libor plus 325 to 350 basis points, according to a market source.

Tranching on the well-oversubscribed deal consists of a $20 million six-year revolving credit facility and a $90 million seven-year first-lien term loan.

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

Prior to the deal's Aug. 10 bank meeting, the anticipation was that there would be a $25 million 71/2-year second-lien term loan included in the capital structure based on a commitment letter that was filed with the Securities and Exchange Commission, which would have brought the total deal size to $135 million.

However, because Secure Computing generated more cash than was expected, the need for that second-lien term loan was eliminated.

Citigroup and UBS are joint lead arrangers and joint bookrunners on the deal, with Citi also administrative agent and UBS syndication agent.

Proceeds will be used to fund the acquisition of CipherTrust, Inc. for $273.6 million, which is comprised of $185 million in cash, 10 million shares of Secure Computing common stock and a $10 million seller note that is subject to certain performance obligations.

Secure Computing is a San Jose, Calif., developer of network security solutions. CipherTrust is an Alpharetta, Ga., provider of messaging security.

Sonic sees good demand

Sonic's $675 million seven-year term loan B is said to be oversubscribed, resulting in speculation the pricing will at the very least firm up at the low end of current guidance, according to a market source.

The term loan is being talked at Libor plus 200 to 225 basis points, but, based on the demand, "I don't think it will come at 225," the source remarked.

Official pricing on the deal has yet to finalize, the source added.

Sonic's $775 million senior secured credit facility (Ba3/BB-) also contains a $100 million five-year revolver was presented with price talk of Libor plus 175 basis points.

Bank of America and Lehman Brothers are the joint lead arrangers on the deal, with Lehman also acting as syndication agent.

Proceeds will be used to fund a modified Dutch auction tender offer to purchase up to $560 million of its common stock and to refinance certain existing debt.

The tender offer, which is subject to successful completion of the credit facility, was commenced on Aug. 15 and expires on Sept. 22.

After completion of the tender offer, subject to market conditions, the company may pursue a refinancing of its new senior secured credit facility with a securitized transaction and has engaged Lehman Brothers as its structuring adviser to evaluate the securitized transaction.

Sonic is an Oklahoma City-based chain of drive-in restaurants.

HealthSouth stronger

Switching to trading, HealthSouth's term loan B headed higher by about an eighth of a point on market technicals, according to a trader.

The term loan B closed the day quoted at par ½ bid, 101 offered, the trader said.

HealthSouth is a Birmingham, Ala.-based provider of outpatient surgery, diagnostic imaging and rehabilitative health care services.

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