Learning Care, RailAmerica break; Dean Foods softens; LCDX slides; Sorenson sets talk

By Sara Rosenberg

New York June 25 - Learning Care Group's credit facility freed up for trading during market hours with the term loan quoted north of its original issue discount price, and RailAmerica Inc.'s amended term loan broke as well.

In more trading happenings, Dean Foods Co.'s term loan B weakened despite news that the company increased second=quarter earnings expectations, First Data Corp. was lower with the overall cash market, LCDX 10 traded down and bids were due on a BWIC.

Moving to the primary, Sorenson Communications Inc. came out with price talk on its holdco PIK loan as the deal was launched to investors on Wednesday.

Learning Care Group's credit facility hit the secondary market during the session, with the $175 million term loan seen above the discount price at which it was sold during syndication, according to traders.

The term loan was quoted at 96¼ bid, no offers by two traders, and at 96¼ bid, 97¼ offered by a third trader.

The term loan priced in line with initial talk at Libor plus 450 basis points with a 3.5% Libor floor and was sold to investors at an original issue discount of 96.

Syndication on the term loan was said by sources to have gone well with the deal oversubscribed, helped along by a pretty successful pre-marketing round.

Learning Care's $215 million credit facility (Ba3/B+) also includes a $40 million revolver, which will be undrawn at close, that is priced at Libor plus 450 bps as well.

Barclays Capital is the lead bank and administrative agent on the deal. Wells Fargo signed on as the syndication agent.

Proceeds will be used to help fund Morgan Stanley Private Equity's purchase of a 60% interest in the company from A.B.C. Learning Centres.

The transaction, which values Learning Care at $700 million, is expected to close following regulatory approval, funding of the committed financing facility and consent of A.B.C.'s senior lenders.

Learning Care Group is a Novi, Mich., provider of early education and care services to children between the ages of six weeks and 12 years.

RailAmerica frees to trade

RailAmerica's amended $625 million bridge loan also broke for trading on Wednesday, according to a trader.

The loan was quoted at 99 bid, 99¾ offered, the trader said, adding that activity in it was very light.

RailAmerica amended the bridge loan to extend it for one year with the option to extend it for another year.

In return for the extension, lenders were given higher pricing on the loan of Libor plus 400 bps, up from previous pricing of Libor plus 225 bps.

Lenders are also getting a 200 bps amendment fee, with 100 bps payable now and the other 100 bps payable in August.

Citigroup acted as the lead bank on the deal.

RailAmerica is a Boca Raton, Fla., short-line and regional rail service provider.

Dean Foods heads down

Dean Foods' term loan B traded lower during market hours even though the company came out with the positive news that it expects to beat its previously issued guidance on earnings per share in the second quarter, according to a trader.

The term loan B was quoted at 94¾ bid, 95½ offered, down from 95½ bid, 96 offered, the trader said, adding that he had no idea why the paper weakened.

On Wednesday morning, the company said that it now expects adjusted diluted earnings for the quarter ending June 30 to be at least $0.32 per share, up from previous guidance of $0.26 to $0.31 per diluted adjusted share.

"Our DSD Dairy business is performing particularly well in the second quarter," said Gregg Engles, chairman and chief executive officer, in a news release. "Our team's efforts to reduce the cost of production and distribution, combined with effective management of the pass through of increased dairy commodity and energy costs through this inflationary period, is resulting in a strong overall performance in the second quarter.

"As a result, we are increasing our guidance for the second quarter and reaffirming our full-year guidance for at least $1.20 per share in adjusted earnings. We will provide more detail on the second-quarter performance and our full-year expectations in conjunction with our earnings report in early August," Engles added in the release.

Furthermore, the company said that it expects to end the second quarter with a leverage ratio of about 5.5 times, compared to a credit facility covenant level of 6.25 times, and that it continues to generate strong cash flow in the quarter.

The leverage ratio steps down to 5.75 times at the end of this year, but according to the company, that should be no problem since it is already below that level and it expects to be even lower - below 5.25 times - at year end.

Dean Foods is a Dallas-based processor and distributor of milk and other dairy products.

First Data dips

First Data's term loan B debt was also softer on Wednesday as the cash market in general felt weaker by about a quarter to a half a point and LCDX 10 was down to 97.60 bid, 97.70 offered from 97.95 bid, 98.05 offered, according to a trader.

The term loan B was quoted at 92¼ bid, 93 offered, down from 92 5/8 bid, 93 1/8 offered, the trader said.

"It opened up down and stayed there the rest of the day," the trader remarked.

First Data did have some news come out on Wednesday as the company revealed that it amended its interim loans to increase pricing and accelerate to Sept. 24 the date on which the loans may be exchanged for notes.

First Data is a Greenwood Village, Colo., provider of electronic commerce and payment services.

Ford, Claire's gain ground

Even though the cash market felt weaker, it was also, to an extent, a little bit of mixed bag with some names, such as Ford Motor Co. and Claire's Stores Inc., trading up for no noticeable reason, according to a trader.

Ford, a Dearborn, Mich.-based automotive company, saw its term loan quoted at 82¼ bid, 83 offered, up from 81¼ bid, 82¼ offered, the trader said.

And. Claire's, a Pembroke Pines, Fla.-based specialty retailer of value-priced jewelry and accessories, saw its term loan quoted at 73½ bid, 74 offered, up from 72¼ bid, 73¼ offered, the trader continued.

"Might have gotten lifted by just one buyer or something," the trader added about Claire's.

BWIC nabs attention

One event that grabbed some traders' attention on Wednesday was a $439 million BWIC for which bids were due on Wednesday, according to sources.

The BWIC was made up of mostly first-lien loans.

Sorenson talk emerges

Switching to primary news, Sorenson Communications held a conference call on Wednesday afternoon to kick off syndication on its proposed $215 million holdco loan, and in conjunction with the launch, price talk was announced, according to a market source.

The loan was presented to lenders with talk of Libor plus 1,100 bps PIK with a 3% Libor floor and an original issue discount of 97, the source said.

Call protection on the holdco deal is non-callable for one-year, then at par in year two, 104 in year three, 102 in year four and 101 in year five.

"It's a great credit. These guys get reimbursed from the government and people have to use it no matter how bad the economy is," the source remarked.

"Results have been pretty good for the past year so they deleveraged a lot," the source added.

Goldman Sachs and Morgan Stanley are the lead banks on the deal, with Goldman the left lead.

Proceeds from the loan will be used to fund a dividend to sponsors.

Sorenson is a Salt Lake City-based provider of video relay services and equipment for the deaf and hard-of-hearing community.

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