Avis term loan B syndication may slide into September; Par Pharmaceutical readies deal

By Sara Rosenberg

New York, Aug. 24 - Syndication of Avis Budget Group Inc.'s term loan B is expected by accounts to slip into post-Labor Day territory given the proximity of the holiday weekend and market conditions in general, while the company's pro rata debt is anticipated to wrap by the end of August.

In other news, Par Pharmaceutical Cos. Inc. emerged on Thursday with plans for a new acquisition financing credit facility and outlined expected terms on the transaction.

Avis B loan likely next month

Accounts believe that completion of syndication on Avis Budget Group's $400 million term loan B is going to slide into next month's business, sources said, adding that the $200 million term loan A and $300 million revolver add-on should get done before this month is through.

Sources explained that the company was watching the markets on a day-to-day basis and given that it's already late August and conditions haven't been the most favorable, clarity on deal terms for the B loan will probably wait till after the Labor Day holiday weekend.

It is also expected that term loan B pricing will widen out before syndication is done since the deal launched in early August, prior to the large selloff in the market, so original talk does not reflect current conditions, sources added.

Avis price talk

As outlined at the early August launch, Avis' term loan A and revolver are being talked at Libor plus 300 basis points, subject to a ratings based grid, with no Libor floor. These tranches are being sold as a strip in a 1:1 ratio.

The term loan B, meanwhile, is being talked at Libor plus 350 bps with a 1.25% Libor floor, an original issue discount of 99 and 101 soft call protection for one year.

Morgan Stanley & Co. Inc., Citigroup Global Markets Inc., Credit Agricole Securities (USA) Inc., Scotia Capital (USA) Inc. and RBS Securities Inc. are the lead banks on the $900 million of incremental senior secured credit facility debt (BB).

Avis funding acquisition

Proceeds from Avis' new loans will be used to help fund the acquisition of Avis Europe plc for 3.15 pounds in cash per share. The transaction is valued at 635 million pounds, or about $1 billion.

Closing is expected to take place in October, subject to Avis Europe shareholder approval, court approval and regulatory clearances.

In order to complete the transaction, Avid has to amend its existing credit facility to allow for the acquisition. The amendment also increased the consolidated leverage ratio by 0.50 for periods subsequent to Sept. 30, increased the maximum amount of incremental facilities by $385 million and provided additional flexibility under the debt, lien and investment covenants.

Parsippany, N.J.-based Avis Budget and England-based Avis Europe are vehicle rental companies.

Par Pharmaceutical deal plans

Also on the primary side, Par Pharmaceutical expects to get a new $450 million five-year senior credit facility, consisting of a $100 million revolver and a $350 million term loan, the company said in an 8-K filed with the Securities and Exchange Commission on Wednesday.

Pricing on the deal is anticipated to initially be Libor plus 250 bps, with the revolver having a 37.5 bps unused fee. The spread on both tranches can range from Libor plus 200 bps to 300 bps, and the revolver unused fee can range from 37.5 bps to 50 bps, based on leverage.

J.P. Morgan Securities LLC is the sole bookrunner and lead arranger on the facility.

Financial covenants include a maximum total leverage ratio of 3 to 1 and a minimum fixed-charge coverage ratio of 2 to 1.

Par Pharma buying Anchen

Proceeds from Par Pharmaceutical's credit facility, along with $60 million in cash on hand, will be used to fund the acquisition of Anchen Pharmaceuticals Inc. and refinance an existing $75 million revolver.

Anchen, an Irvine, Calif.-based specialty pharmaceutical company focused on developing and commercializing extended release and niche generic products, is being purchased for $410 million in cash.

Closing on the transaction is expected by the end of the year, subject to customary conditions and approvals.

Par Pharmaceutical is a Woodcliff Lake, N.J.-based specialty pharmaceutical company.

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