Strategic Partners breaks; Advance Pierre structure emerges; Valeant firms timing; Cenveo pulled

By Sara Rosenberg

New York, Aug. 23 - Strategic Partners' credit facility freed up for trading during Monday's market hours, with the term loan quoted above the original issue discount price at which it was sold during syndication.

Over in the primary market, some more information surfaced on Advance Pierre Foods' proposed credit facility, including a breakdown on tranching and a narrower timeframe for the bank meeting date.

Also, Valeant Pharmaceuticals International Inc. nailed down timing on the launch of its credit facility with the scheduling of a bank meeting in early September, and Cenveo Inc. has opted to pass on the acquisition of National Envelope Corp., for which a term loan add-on was being marketed.

Strategic Partners starts trading

Strategic Partners' credit facility hit the secondary market, with the $175 million term loan quoted at 99½ bid, par offered on the open and then inching up to 99 7/8 bid, no offers, according to market sources.

Pricing on the term loan is Libor plus 550 basis points with a 1.75% Libor floor, and it was sold at an original issue discount of 99.

During syndication, pricing on the term loan was reverse flexed from Libor plus 600 bps and the discount was tightened from 98.

The company's $205 million credit facility (B1/B) also includes a $30 million revolver priced at Libor plus 550 bps with a 1.75% Libor floor as well.

The spread on the revolver was also reduced form initial talk of Libor plus 600 bps during the syndication process.

Strategic Partners lead banks

Credit Suisse and Bank of America are the lead banks on Strategic Partners' credit facility, with Credit Suisse the left lead. And, prior to the deal's bank meeting, GE Capital and Union Bank of California signed on as documentation agents.

Proceeds will be used to help fund the buyout of the company by BAML Capital.

Other funding for the transaction will come from $75 million of mezzanine debt.

Leverage through the credit facility is 3.3 times and total leverage is 4.6 times.

Strategic Partners is a Chatsworth, Calif.-based designer and manufacturer of medical, school and footwear uniforms.

Advance Pierre reveals tranching

Switching to the primary, Advance Pierre Foods came out with structural details on its proposed credit facility as the launch for the deal is getting closer, according to a market source.

The $1.14 billion credit facility is comprised of a $75 million ABL revolver, an $835 million first-lien term loan and a $230 million second-lien term loan, the source said.

Previously, the structure was simply described as including roughly $1 billion of first- and second-lien term loan debt and an ABL revolver.

Price talk on the tranches is not yet available.

Credit Suisse, Barclays Capital, Morgan Stanley and BMO Capital Markets are the lead banks on the deal, with Credit Suisse the left lead.

Advance Pierre readies launch

In addition, timing on the launch of Advance Pierre Foods' credit facility is getting closer to firming up, with the bank meeting now expected to take place during the week of Sept. 6, with the specific day still to be determined, the source remarked.

Prior to now, the launch was just labeled as a September event.

Proceeds from the facility will be used to fund the creation of the company through the merger of Pierre Foods Inc., Advance Food Co. Inc. and Advance Brands LLC.

Following completion of the merger, Oaktree Capital Management, the current majority shareholder of Pierre Foods, will maintain a majority share of the combined company. The current shareholders of Advance Food, the Allen and McLaughlin families, will own a minority share of the combined company.

Advance Pierre Foods will be a Cincinnati-based supplier of value-added protein and handheld convenience food products to the foodservice, school, retail, club, vending and convenience store channels.

Valeant meeting surfaces

Valeant Pharmaceuticals has firmed up timing on the launch of its proposed $3.022 billion senior secured credit facility with the scheduling of a bank meeting for Sept. 8 in New York, a market source told Prospect News, whereas previously, the only timing known was that it was targeted for early September,.

According to the commitment letter, the deal consists of a $250 million 41/2-year revolver, a $500 million five-year term loan A, an up to $1.972 billion six-year term loan B and a $300 million delayed-draw six-year term loan B that is available until the earlier of Dec. 31 or 60 days after closing.

However, filings with the Securities and Exchange Commission also disclosed that, if necessary, the banks can convert the entire term loan A into the term loan B or split the term loans into multiple tranches, including a senior unsecured tranche, a senior second-lien tranche or a tranche of debt securities.

In addition, the banks can reduce the tenor of the term loan to 4½ years, the tenor of the term loan B to five years and the tenor of the revolver to four years.

Valeant potential pricing

Regarding pricing, Valeant's commitment letter outlined the spread on the revolver and the term loan A at Libor plus 450 bps, and the spread on the term loan B at Libor plus 475 bps.

The letter went on to say that if the credit facility is rated at least Ba3/BB-, pricing on the revolver and term loan A is expected at Libor plus 425 bps, and pricing on the term loan B is expected at Libor plus 450 bps. Additionally, if the rating is B2/B, pricing on the revolver and term loan A is expected at Libor plus 525 bps, and pricing on the term loan B is expected at Libor plus 550 bps.

But, the banks were given wiggle room with pricing as well. During syndication, the weighted average interest rate can be increased by up to 275 bps if the facility closing date occurs prior to Dec. 15 or up to 375 basis points if the closing date occurs on or after Dec. 15.

As committed, the term loan B has a 1.75% Libor floor and a $250 million accordion feature, the revolver has a 75 bps commitment fee and the delayed-draw term loan B has a 75 bps ticking fee. The banks can add 102, 101 soft call protection to the term loan B tranche if necessary.

Valeant amortization details

Amortization on Valeant's term loan A was outlined in the commitment letter as 10% in years one and two and 20% in years three and four, with the remaining balance due at maturity, and amortization on the term loan B was outlined as 1% per annum, with the remaining balance due at maturity.

However, filings have revealed that this, too, can change. Banks have the ability to increase the amortization applicable to the term loan B to up to 5% per annum.

Other options available to the banks are to increase the excess cash flow sweep to 75% from 50% and eliminate the accordion feature, the filings said.

Financial covenants include a maximum total leverage ratio, minimum total interest coverage and maximum capital expenditures.

Goldman Sachs, Morgan Stanley and Jefferies are the joint lead arrangers and joint bookrunners on the deal, with Goldman the administrative agent and left lead.

Valeant merging with Biovail

Proceeds from Valeant's credit facility will be used to fund a merger with Biovail Corp. and refinance existing debt, including Valeant's 7.625% and 8.375% senior unsecured notes.

Under the terms of the agreement, Valeant stockholders will receive a one-time special cash dividend of $16.77 per share immediately prior to closing of the merger and 1.7809 shares of Biovail common stock upon closing of the merger in exchange for each share of Valeant common stock they own.

Upon the completion of the merger, Biovail stockholders will own 50.5% and Valeant stockholders will own 49.5% of the shares of the combined company on a fully diluted basis.

The transaction is expected to close before year-end, subject to Valeant and Biovail stockholder approval, which will be sought at a special meeting on Sept. 27, and regulatory approvals.

Valeant additional dividend

Also as part of the transaction, Valeant expects to offer all stockholders of the merged company an additional one-time $1 per share special dividend by Dec. 31.

This one-time dividend will be funded through the delayed-draw term loan B.

The amount of the initial draw under the term loan B will be reduced dollar for dollar by the net proceeds of any securities issued by the company prior to closing and the aggregate principal amount of the existing notes that remain outstanding after closing.

Aliso Viejo, Calif.-based Valeant and Mississauga, Ont.,-based Biovail are specialty pharmaceutical companies. The combined company will be based in Mississauga and will be named Valeant Pharmaceuticals International Inc.

Cenveo passes on National Envelope

Cenveo announced in a news release on Monday that it is no longer looking to purchase bankrupt National Envelope Corp., a Uniondale, N.Y.-based envelope manufacturing company.

The company was marketing via Bank of America a $100 million term loan add-on talked at Libor plus 350 bps with an original issue discount of 96 to fund its bid for National Envelope, and since the acquisition is not going through, the loan is not being done, a market source said.

"Despite offering the unsecured creditors what we believed to be the highest potential recovery out of all the bids at the auction, it became very clear to us that the debtors and the creditors' committee were requiring significantly more in cash and guarantees from Cenveo than from the other bidders and seeking to saddle Cenveo with unacceptable risk that no other bidders were being asked to bear," said Robert G. Burton, Sr., chairman and chief executive officer, in the release.

"Under those circumstances, Cenveo had no interest in acquiring these assets," Burton added.

Cenveo is a Stamford, Conn.-based manager and distributor of print and related products and services.

Allscripts completes deal

In other news, Allscripts closed on its $720 million credit facility (Ba2/BBB-), consisting of a $250 million five-year revolver and a $470 million term loan A, with both tranches priced at Libor plus 300 bps, according to an 8-K filed with the SEC on Monday.

The revolver has a 50 bps unused fee.

JPMorgan, Barclays and UBS acted as the lead arrangers and bookrunners on the deal that was completed this past Friday.

During syndication, the term loan A was upsized from $320 million, the revolver was upsized from $150 million and a $250 million term loan B was dropped from the capital structure. Also, pricing on the term loan A and the revolver was reduced from Libor plus 325 bps.

Allscripts, a Chicago-based provider of software, services, information and connectivity services to physicians and other health care providers, used proceeds from the facility to buyback shares from Misys plc.

Intermedix closes

Thomas H. Lee Partners LP completed its buyout of Intermedix Corp. from Parthenon Capital Partners and its minority shareholders, including Glenview Capital Management, according to a news release.

To help fund the transaction, Intermedix obtained a new senior credit facility led by Citigroup, Wells Fargo, GE Capital and Ares Capital.

The term loan under the facility was funded entirely by the Senior Secured Loan Fund LLC, a joint venture between GE Capital and Ares.

Other funding came from mezzanine debt provided by TCW/Crescent Mezzanine Management V LLC and Audax Mezzanine Fund II LP.

Intermedix is a Fort Lauderdale, Fla.-based provider of revenue cycle management and software services to the emergency health care industry.

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