Sorenson cuts second-lien spread; Workflow sweetens term loans; Polymer floats price talk

By Sara Rosenberg

New York, Nov. 2 - Sorenson Communications reverse flexed pricing on its second-lien term loan and added a step down to its first-lien term loan as the tranches were nicely oversubscribed. Also, Workflow Management Inc. reworked its term loans, reducing sizes, increasing pricing and adding an original issue discount and call protection.

Meanwhile, Polymer Group Inc. has started circulating spread guidance on its proposed term loan B ahead of Thursday's bank meeting.

Sorenson Communications reduced pricing on its second-lien term loan by 25 basis points and added a 25 basis point leverage-based step down to its first-lien term loan on good investor demand.

And, by late afternoon most participants had already recommitted to the changed deal, with only a few more responses left to get in before the 5 p.m. ET Wednesday recommitment deadline, according to a market source.

The $160 million second-lien term loan is now priced with an interest rate of Libor plus 700 basis points, as compared to initial price talk of Libor plus 725 basis points, the source said. This tranche was close to two times oversubscribed as about $300 million in orders came in from investors.

As for the $405 million first-lien term loan, pricing remained at Libor plus 300 basis points, but a step down to Libor plus 275 basis points was added, effective upon the company achieving total leverage inside of 61/4x, the source continued. This tranche was adequately oversubscribed as about $640 million in orders came in from investors.

The second-lien tranche contains, and has since launch, call protection of 102 in year one and 101 in year two.

Sorenson Communications' $585 million credit facility also contains a $20 million revolver.

Allocations on the deal are expected to go out around mid-next week.

Leverage through the first lien will be 3.9x, and leverage through the second lien will be 5.4x.

Bank of America and Royal Bank of Scotland are joint leads arrangers on the deal, with Bank of America on the left.

Proceeds from the credit facility will be used to help fund GTCR Golder Rauner LLC's acquisition of Sorenson Communications from the Sorenson family. The transaction is scheduled to close in November.

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

Workflow reworks deal

Workflow made a number of changes to its first- and second-lien term loan tranches to make them juicier for investors, including flexing pricing higher, reducing tranche sizes, adding an original issue discount and adding call protection.

The five-year first-lien term loan B (B2/BB-) is now sized at $275 million, down from an original size of $300 million, and pricing has been flexed higher to Libor plus 375 basis points from original price talk at launch of Libor plus 300 basis points, according to a market source. Furthermore, 101 soft call protection for one year was added to the tranche.

The seven-year second-lien term loan (B3/B) is now sized at $110 million, down from an original size of $115 million, and pricing has been flexed higher to Libor plus 800 basis points from original price talk at launch of Libor plus 700 basis points, the source said. Furthermore, call protection was added to the tranche; however, whether that protection is 103 in year one, 102 in year two and 101 in year three or whether it is just 102 in year one and 101 in year two was unclear prior to press time, the source added.

Both the first- and the second-lien term loans gained an original issue discount price of 991/2, compared to the original offer price of par.

Workflow Management's now $425 million credit facility (down from $455 million) also contains a $40 million five-year revolver (B2/BB-) with a 50 basis point commitment fee.

Credit Suisse First Boston, National City Bank and Royal Bank of Canada are joint lead arrangers on the deal.

Proceeds will be used to fund the acquisition of Relizon Co., a North American supplier of business process solutions for document outsourcing, billing and marketing.

Workflow, a portfolio company of Perseus LLC, is a New York-based full-service print and promotional products provider.

Polymer price talk

Polymer Group has started telling investors to expect its $405 million seven-year term loan B to be launched Thursday with opening price talk in the Libor plus 200 basis points area, depending on ratings, according to a market source.

Price talk on the company's proposed $50 million five-year revolver has yet to surface, the source added.

Proceeds from the $455 million credit facility (B1) will be used to refinance the company's existing credit facility that consists of a $280 million first-lien term loan B, a $125 million second-lien term loan C and a $50 million revolver.

Essentially, the company is looking to roll its existing first-lien term loan B and second-lien term loan C into one large first-lien term loan to lower overall cost of debt and simplify the capital structure.

Citigroup is the lead bank on the deal.

Polymer Group is a North Charleston, S.C., technology-driven developer, manufacturer and marketer of engineered materials.

Rinker Boat downsizes, ups pricing

Rinker Boat Co. reduced the size of its term loan by $15 million, while at the same time increasing pricing by 50 basis points, according to a market source.

The term loan is now sized at $139.5 million, down from an original size of $154.5 million, and pricing on the tranche was upped to Libor plus 375 basis points from original price talk at launch of Libor plus 325 basis points, the source said.

Rinker's $159.5 million credit facility (B2) also contains a $20 million revolver.

JPMorgan and General Electric Capital Corp. are the lead banks on the deal.

Proceeds will be used by the Syracuse, Ind., boat maker to purchase boat maker Godfrey Marine.

Huntsman wobbles on numbers

Huntsman Corp.'s bank debt fell off by about a quarter of a point early in the session after the release of disappointing third-quarter numbers, but levels rebounded fully by the end of the day as investors' decided that the situation was not as bad as was originally thought, according to a trader.

More specifically, the Salt Lake City-based chemical company's bank debt dropped to par ¼ bid, par ½ offered in the morning before rebounding to par ½ bid, par ¾ offered by close to end the day unchanged, the trader said.

For the third quarter, Huntsman reported EBITDA of $202.4 million including $116.6 million of various charges compared to $293.2 million of EBITDA in 2004 including $36.4 million of charges. The company reported a net loss of $29.8 million for the third quarter compared to net income of $43.7 million in the third quarter of 2004.

"The third quarter was extremely challenging from an operating perspective. Hurricane Katrina and Hurricane Rita negatively impacted not only our manufacturing facilities in the U.S. Gulf Coast but also the operations of many of our customers and suppliers. These storms also resulted in dramatic increases in feedstock and energy costs in the second half of the quarter," said Peter R. Huntsman, president and chief executive officer, in the company news release.

"Our results were also negatively impacted by an unplanned maintenance outage at our Port Neches PO/MTBE unit. We have recently re-started, or are in the process of restarting, all of our primary units that were impacted by Hurricane Rita and are very encouraged by the rapid increases in selling prices that have occurred in many of our commodity product lines. In addition, raw material pressures appear to have eased in recent weeks, which together with initiatives to raise our selling prices in our differentiated segments, should provide opportunities to expand profitability as we enter 2006," Huntsman added in the release.

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