Halyard Health, Omnitracs set issue prices, break; Flavors Holdings modifies term loans

By Sara Rosenberg

New York, Oct. 2 – Halyard Health Inc. finalized the original issue discount on its term loan B at the wide end of guidance and then freed up for trading on Thursday, and Omnitracs LLC also firmed issue prices before its add-on debt surfaced in the secondary.

In more happenings, Flavors Holdings Inc. reduced the sizes of its first- and second-lien term loans, widened spreads and original issue discounts on the tranches and sweetened the second-lien call protection, while Styrolution and Sutherland Global Services Inc. joined the near-term calendar.

Halyard firms OID, trades

Halyard Health set the original issue discount on its $390 million seven-year senior secured term loan B at 99, the high end of the 99 to 99½ talk, according to a market source.

The term loan B is priced at Libor plus 325 basis points with a 0.75% Libor floor, and has 101 soft call protection for one year as well as a ticking fee of the full spread after 30 days.

Recently, the spread on the B loan was cut from Libor plus 350 bps, and the ticking fee was changed from half the spread from days 31 to 60 and the full spread thereafter.

With final terms in place, the term loan B made its way into the secondary market, and levels were seen at 99¾ bid, par ¼ offered, a trader remarked.

Halyard getting revolver

Along with the term loan B, Halyard Health intends to get a $250 million senior secured revolver that is expected to be undrawn at close.

Proceeds from the credit facility and $250 million of senior unsecured notes will be used to help fund the company’s spinoff from Kimberly-Clark Corp, which is expected to be completed by the end of this month.

Morgan Stanley Senior Funding Inc., Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and RBC Capital Markets LLC are leading the loan deal (Ba2/BB).

Halyard Health is an Alpharetta, Ga.-based health care company focused on preventing infection, eliminating pain and speeding recovery.

Omnitracs hits secondary

Omnitracs’ bank debt broke for trading too, with the fungible $110 million add-on first-lien covenant-light term loan (B) due November 2020 quoted at 99½ bid, par offered and the fungible $40 million add-on second-lien covenant-light term loan (CCC+) due May 2021 quoted at 99½ bid, according to a trader.

Pricing on the add-on first-lien loan is Libor plus 375 bps with a 1% Libor floor, in line with the existing first-lien term loan, and it was sold at an original issue discount of 99¼. All of the first-lien debt has 101 soft call protection for six months.

The add-on second-lien term loan is priced at Libor plus 775 bps with a 1% Libor floor, which matches the existing second-lien term loan, and it was issued at a discount of 99¼. This debt has call protection of 102 through Nov. 25 and then 101 through Nov. 25, 2015.

Original issue discounts on both the add-on first- and second-lien term loans firmed at the midpoint of the 99 to 99½ talk, a source said.

Omnitracs buying XRS

Proceeds from Omnitracs’ add-on secured term loans will be used to help fund the acquisition of XRS Corp. for $5.60 per share, which equates to $178 million in equity value.

RBC Capital Markets, Credit Suisse Securities (USA) LLC and Guggenheim Corporate Funding LLC are leading the loans.

Closing is expected in the fourth quarter, subject to XRS shareholder approval, expiration or termination of the waiting period under the Hart-Scott-Rodino Act and other customary conditions.

Omnitracs is a San Diego-based provider of fleet management services, including software applications, information services, and hardware platforms for private and for-hire fleets. XRS is an Eden Prairie, Minn.-based provider of mobile fleet optimization software.

Flavors restructures

Back in the primary, Flavors Holdings trimmed its six-year first-lien term loan to $350 million from $365 million, raised pricing to Libor plus 575 bps from Libor plus 550 bps, moved the original issue discount to 96 from 99 and beefed up amortization to 5% from 1%, according to a market source, who said the 1% Libor floor and 101 soft call protection for one year were unchanged.

Meanwhile, the seven-year second-lien term loan was downsized to $50 million from $75 million, pricing was increased to Libor plus 1,000 bps from Libor plus 950 bps, the original issue discount widened to 96 from 98½, and the call protection was modified to non-callable for one year, then at 103 in year two, 102 in year three and 101 in year four, from 103 in year one, 102 in year two and 101 in year three, the source remarked. This tranche still has a 1% Libor floor.

In addition, the excess cash flow sweep was revised to 75% with step-downs from 50% with step-downs.

The company’s now $450 million credit facility also includes a $50 million revolver.

Flavors lead banks

Credit Suisse Securities (USA) LLC, Jefferies Finance LLC, Deutsche Bank Securities Inc. and PNC Capital Markets are leading Flavors Holdings’ credit facility for which recommitments are due at 5 p.m. ET on Friday.

Proceeds will be used to fund the acquisition of Merisant Co., a producer of low-calorie tabletop sweeteners, by Mafco Worldwide, a Camden, N.J.-based manufacturer of licorice extract and related derivatives for use as flavoring and moistening agents.

To compensate for the reduction in term loan debt, the cash equity for the transaction was raised to $60 million from $35 million and the drawn revolver amount was lifted to $21 million from $15million.

First-lien net leverage is 3.8 times, compared to 3.9 times under the original proposal, and total net leverage is 4.3 times, versus 4.7 times under the initial structure, the source added.

Flavors is a provider of flavoring and sweetening products and services.

Styrolution on deck

Styrolution set a bank meeting in New York on Monday and a bank meeting in London on Tuesday to launch a €1.05 billion five-year equivalent term loan B that will include U.S. and euro tranches, a source said.

Barclays (left on U.S.) and J.P. Morgan Securities LLC (left on euro) are the global coordinators.

Proceeds, along with additional second-lien debt and cash on hand will be used to fund Ineos’ acquisition of BASF SE’s 50% share in Styrolution, a Frankfurt-based styrenics supplier, so that it would become a wholly owned, standalone company within Ineos, and to redeem Styrolution’s existing 7 5/8% senior secured notes due 2016.

Styrolution second attempt

Styrolution’s upcoming deal is a second try to get a term loan B. This summer the company had been in market with a €1.6 billion equivalent U.S. and euro seven-year term loan B for the same purpose, but the deal was pulled due to unfavorable primary conditions.

The U.S. portion of the pulled term loan B was talked at Libor plus 400 bps with a 1% Libor floor and a discount of 99, after flexing from Libor plus 350 bps with a discount of 99½, and the euro portion was talked at Euribor plus 400 bps to 425 bps with a 1% floor and a discount of 99, after flexing from Euribor plus 350 bps to 375 bps with a discount of 99½. Both tranches included 101 soft call protection for six months.

Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Barclays, HSBC and J.P. Morgan Securities LLC were the lead banks on the pulled deal, with Citigroup the left lead on the U.S. portion and Credit Suisse the left lead on the euro portion.

Sutherland readies loan

Sutherland Global Services scheduled a bank meeting for Friday to launch a $340 million 6½-year term loan B, according to a market source.

Bank of America Merrill Lynch, Credit Suisse Securities (USA) LLC and HSBC Securities (USA) Inc. are leading the deal that will be used to refinance existing debt and repurchase equity.

Sutherland is a Rochester, N.Y.-based provider of business process and technology management services.

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