Citgo breaks; NRG bid up; Universal Health, PSC, SoftLayer set talk; Sophos tweaks deal

By Sara Rosenberg

New York, June 24 - Citgo Petroleum Corp.'s credit facility allocated and freed up for trading on Thursday, and NRG Energy Inc.'s strip of institutional bank debt was better bid following changes to the company's amendment and extension proposal.

Moving to the primary market, Universal Health Services Inc. released structure and price talk, and PSC LLC also revealed talk as both credit facilities were presented to lenders during the session, and SoftLayer Technologies Inc. began circulating guidance on its upcoming deal.

Also, Sophos plc came out with a number of changes to its credit facility, including upsizing and shortening the maturity on the term loan B, increasing pricing on all tranches, and revising the excess cash flow sweep and accordion feature.

Citgo frees to trade

Citgo's credit facility hit the secondary market, with the $350 million five-year term loan B and the $700 million seven-year term loan C both quoted above their original issue discount prices by the end of the day, according to traders.

Specifically, the term loan B was quoted by one trader at 98¼ bid, 99 offered, by a second trader at 98 3/8 bid, 98 5/8 offered, and by a third trader at 98¼ bid, 98¾ offered. The third trader said the B loan broke at 98½ bid, 99 offered, traded down to a bid that was sub-OID and then rebounded to the current levels.

Meanwhile, the term loan C was quoted by the first trader at 99½ bid, par ½ offered.

Pricing on the term loan B is Libor plus 600 basis points and pricing on the term loan C is Libor plus 700 bps, with both tranches carrying a 2% Libor floor, and both were sold at an original issue discount of 98.

The term loan B has call protection of 102 in years one and two, and 101 in year three, and the term loan C is non-callable for two years, then at 102 in year three and 101 in year four.

Citgo getting revolver

Citgo's $1.8 billion senior secured credit facility (Ba2/BB+/BB+) also includes a $750 million priced at Libor plus 450 bps with a 62.5 bps unused fee. The spread is determined by a ratings grid. The tranche was offered at upfront fees ranging from 100 bps to 150 bps based on order size.

When the credit facility was first launched in May, the company was looking to get just a $300 million five-year term loan that was being talked at Libor plus 350 bps with a 1.75% Libor floor and an original issue discount of 981/2, and a $700 million revolver that was talked at Libor plus 325 bps.

The first changes made to the credit facility included upsizing the term loan B to the $500 million to $550 million area, adding a $500 million term loan C, increasing the revolver to $750 million and flexing pricing higher on everything. The B loan was then upsized to $600 million and the C loan to $650 million before settling in at their current sizes.

Citgo lead banks

BNP Paribas, RBS and UBS acted as the lead banks on Citgo's credit facility, which was expected to close on Thursday, with BNP the left lead.

Proceeds from the credit facility will be used to help refinance an existing revolver, term loans and variable industrial revenues bonds and to provide liquidity.

Other funds for the refinancing came from $300 million of senior secured notes, which was downsized from $1.5 billion and brought about the term loan upsizing, and cash on hand.

Citgo is a Houston-based refiner and marketer of transportation fuels, lubricants, petrochemicals and other industrial products.

NRG bid strengthens

NRG Energy's strip of term loan and synthetic letter-of-credit facility debt was bid higher on Thursday as news surfaced that the company's amendment and extension proposal was changed, according to a trader.

The strip of debt was quoted at 95¾ bid, 96½ offered, versus levels of 95½ bid, 96½ offered on Wednesday, the trader said.

As before, under the amendment, which launched earlier this month, the company is looking to extend at least $1 billion of its term loan B and synthetic letter-of-credit facility debt to August 2015 from Feb. 1, 2013.

However, pricing on the extended debt is now being talked at Libor plus 325 bps, up from the previously offered Libor plus 275 bps. Pricing on the non-extended debt is Libor plus 175 bps.

Also, investors are now being offered 101 soft call protection for one year on the extended debt.

NRG boosts amendment fee

On top of sweetening pricing, NRG also increased the amendment fee that it is offering lenders to 25 bps from 12.5 bps, sources said.

Term loan B and letter-of-credit facility lenders are still being offered a 12.5 bps extension fee.

Commitments are due on Friday.

In addition to the institutional debt extension, the company is looking to refinance its $1 billion revolving credit facility with a new five-year facility.

Citigroup is the lead bank on the deal.

NRG is a Princeton, N.J.-based owner and operator of diverse power generation portfolios.

Universal Health structure/talk

Switching to the primary, Universal Health held a bank meeting on Thursday afternoon to kick off syndication on its proposed $3.35 billion senior secured credit facility, and in connection with the launch, tranching and price talk was announced, according to sources.

The facility consists of an $800 million revolver talked at Libor plus 325 bps, a $1 billion term loan A talked at Libor plus 325 bps and a $1.55 billion term loan B talked at Libor plus 400 bps with a 1.5% Libor floor and an original issue discount of 981/2, sources said.

The term loan B includes 101 soft call protection for one year.

Terms of the deal are different than what was outlined in the commitment letter, which provided for an $800 million five-year revolver expected at Libor plus 325 bps, a $500 million five-year term loan A expected at Libor plus 325 bps and a $2.85 billion six-year term loan B expected at Libor plus 350 bps with a 1.5% Libor floor.

JPMorgan and Deutsche Bank are the joint lead arrangers and bookrunners on the facility.

Universal Health funding acquisition

Proceeds from Universal Health's credit facility will be used to help fund the acquisition of Psychiatric Solutions Inc. for $33.75 per share in cash, or $1.983 billion, refinance $1.188 billion of Psychiatric Solutions debt, refinance $275 million of Universal Health debt and pay $184 million in transaction fess and expenses.

In addition to the term loans and $322 million drawn on the revolver, the company will use $108 million of cash on hand, a new $400 million senior unsecured capital markets transaction and a $250 million accounts receivables securitization to fund the transaction.

Closing is expected to take place in the fourth quarter, subject to regulatory approvals and approval by Psychiatric Solutions' shareholders.

Universal Health is a King of Prussia, Pa.-based owner and operator of acute care hospitals and behavioral health care facilities and schools. Psychiatric Solutions is a Franklin, Tenn.-based operator of owned or leased freestanding psychiatric inpatient facilities.

PSC talk emerges

PSC also launched its credit facility with a bank meeting on Thursday, and the company announced price talk on its $175 million six-year term loan B in connection with the event, according to a market source.

The term loan B is being talked at Libor plus 475 bps to 500 bps with a 1.75% Libor floor and an original issue discount of 981/2, the source said.

The company's $240 million credit facility also includes a $65 million five-year revolver that has already been syndicated.

Ratings are private and have a high single-B profile.

Commitments are due on July 13.

PSC led by two

RBC Capital Markets and Jefferies are the joint lead arrangers and bookrunners on PSC's proposed credit facility.

Proceeds will be used to help fund the buyout of the company by Lindsay Goldberg from Odysseus Holdings and Arrowhead Holdings for a total equity purchase price of $340 million and enterprise value of $331.5 million.

Equity of around 51% will comprise the remainder of the capitalization.

Pro forma for the transaction, LTM ended May 31 total net leverage is 2.8 times.

PSC is a Houston-based provider of hazardous waste management, industrial cleaning, and logistics services.

SoftLayer floats talk

Price talk on SoftLayer Technologies' proposed credit facility started making its way around the market as the deal is getting ready to launch with a bank meeting on Tuesday, according to sources.

Both the $20 million delayed-draw term loan and the $190 million term loan are being talked at Libor plus 525 bps to 550 bps with a 1.75% Libor floor and an original issue discount of 99, sources said.

Deutsche Bank and SunTrust are the lead banks on the $230 million deal, which also includes a $20 million revolver.

Proceeds will be used to help fund GI Partners' acquisition of a majority stake in the company.

SoftLayer is a Plano, Texas-based provider of on-demand data center and hosting services.

Sophos reworks B loan

Sophos modified the size, pricing and maturity on its term loan B and is asking for commitments by the end of the day on Friday, with the hope being that allocations will go out at the end of next week, according to a market source.

Under the changes, the term loan B was upsized to $229.5 million from $225 million, pricing was flexed up to Libor plus 575 bps from the Libor plus 475 bps area, the original issue discount was increased to 97 from the 99 context and 101 soft call protection for one year was added, the source said.

In addition, the maturity of the term loan B was reduced to six years from seven years and amortization was increased to 3% per year from 1%.

Left unchanged was the term loan B's 2% Libor floor.

The term loan B upsizing was done to accommodate the larger original issue discount, the source explained.

Sophos lifts pro rata spread

Sophos' term loan B was not the only tranche to undergo changes, as pricing on the $75 million six-year euro equivalent term loan A and $20 million six-year revolver was increased to Libor plus 450 bps from Libor plus 400 bps, the source remarked.

Also, in terms of the credit agreement as a whole, that saw revisions to the excess cash flow sweep, which was raised to 75% from 50%, and to the accordion feature, which was reduced to $75 million from $100 million and is now subject to 25 bps of MFN that was not previously there.

RBC and HSBC are the lead banks on the now $324.5 million, up from $320 million, senior secured credit facility (B2/B+), with RBC the left lead.

When the deal was first announced, initial indications were that the term debt would be comprised of a $90 million term loan A and a $210 million term loan B; however, those sizes were labeled as preliminary and likely to change.

Sophos being acquired

Proceeds from Sophos' credit facility will be used to help fund the buyout of the company by Apax Partners in a transaction valued at $830 million.

The revolver and the term loan A was spoken for by the lead banks so it's really only the term loan B that is being syndicated.

When the buyout is completed, the founders of the company will retain a significant minority shareholding. TA Associates, a minority shareholder in Sophos since 2002, will sell its full interest to Apax in this transaction.

Leverage is around 3.8 times.

Sophos is a Boston-based IT security and data protection firm.

Vision Solutions nets interest

In other news, Vision Solutions Inc.'s credit facility is moving along since launching late last week, with some new and existing guys already committing to the deal, according to a market source.

The $255 million senior secured credit facility (B1/B+) is being talked at Libor plus 500 bps with a 1.75% Libor floor and an original issue discount of 981/2.

Tranching on the deal is comprised of a $240 million six-year term loan and a $15 million five-year revolver.

Jefferies is the lead bank on the facility.

Vision Solutions buying Double-Take

Proceeds from Vision Solutions' credit facility will be used to help fund the acquisition of Double-Take Software Inc. in a transaction with a net offer value of about $242 million and to refinance existing debt.

Double-Take stockholders will receive $10.55 in cash per share.

Closing is expected in the third quarter, subject to customary conditions, including the expiration of the Hart-Scott Rodino waiting period and the approval of Double-Take stockholders.

Vision Solutions, a portfolio company of Thoma Bravo LLC, is an Irvine, Calif.-based provider of high availability, disaster recovery and system management services for IBM Power Systems. Double-Take Software is a Southborough, Mass.-based provider of recovery services.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.