National Bedding shifts funds, cuts spreads; UAL, Omnicare set price talk; Calpine softer

By Sara Rosenberg

New York, Aug. 11 - National Bedding Co. moved some funds from its second-lien term loan into its first-lien term loan while at the same time slashing pricing on all tranches.

In other primary doings, price talk on UAL Corp.'s term loan C and Omnicare Inc.'s $2.9 billion credit facility surfaced Thursday as both deals were launched into syndication.

On the secondary front, Calpine Corp.'s second-lien term loan continued to weaken in Thursday's session as investors were still feeling the sting of finding out that they wouldn't be getting a pay down that they were previously counting on.

National Bedding decided to upsize its first-lien term loan by $40 million and downsize its second-lien term loan by the equivalent amount, according to a market source. Furthermore, pricing on all tranches was reduced, and the first-lien term loan saw the addition of a step down as well.

The six-year first-lien term loan (BB-) is now sized at $360 million, compared to an original size of $320 million, and pricing is set at Libor plus 200 basis points, down from original price talk of Libor plus 225 basis points, the source said. In addition, a step down was added under which pricing can drop to Libor plus 175 basis points if leverage falls below 41/2x - an event that is not projected to happen for at least two years.

The seven-year second-lien term loan (B+) is now sized at $160 million, compared to an original size of $200 million, and pricing is now set at Libor plus 500 basis points, down from original price talk of Libor plus 600 basis points, the source said. The tranche contains call protection of 102 in year and 101 in year two.

Lastly, the $50 million five-year revolver (BB-) is now priced at Libor plus 200 basis points. Some sources had originally heard this tranche talked at Libor plus 225 basis points.

These changes were made because the deal was massively oversubscribed. In fact, demand was so good that the syndicate decided to shut down the books on Thursday - a few days ahead of the original Aug. 16 deadline that investors were given at launch, according to a buyside source.

Allocations are expected to go out around 11 a.m. ET on Friday.

Goldman Sachs is the lead bank on the $570 million credit facility, with Merrill Lynch and GE Capital involved as well.

Proceeds from the credit facility will be used to help fund the leveraged buyout of National Bedding by The Ares Corporate Opportunities Fund LP and Teachers' Private Capital.

National Bedding is a Hoffman Estates, Ill., manufacturer of bedding products and is the maker of Serta mattresses.

UAL sets spread

UAL, parent of United Airlines, announced price talk of Libor plus 475 basis points on its term loan C debtor-in-possession financing add-on as the tranche was launched to lenders via a conference call Thursday afternoon, according to a market source.

The term loan C, which is being priced 50 basis points higher than the company's existing DIP debt, is currently sized at $320 million but can be upsized to $350 million if the company obtains the title to all 14 aircraft securing the transaction's outstanding debt by the time the amendment is approved. Currently, the company is offering 10 UAL-owned aircraft as security for the $320 million of term loan C debt.

Proceeds from the term loan C will be used to refinance the company's class A certificates under its 1997-I Enhanced Equipment Trust Certificates transaction.

In connection with the term loan C, the Chicago-based airline company is asking lenders to amend its existing DIP facility to allow for the incremental bank debt.

Commitments are due from lenders on Aug. 22. A court hearing on the amendment is scheduled for Aug. 18.

JPMorgan Chase Bank is the lead bank on the deal.

Omnicare price talk

Omnicare came out with opening price talk of Libor plus 75 basis points on its $700 million five-year term loan and $800 million five-year revolver at its "well attended" Thursday bank meeting, according to a market source. The package also has a $1.4 billion 364-day loan facility which is not being syndicated but is also priced at Libor plus 75 basis points.

The revolver has an undrawn fee of 17.5 basis points.

Commitments are due from lenders in two weeks.

JPMorgan, Lehman Brothers and SunTrust Capital Markets are joint lead arrangers and joint bookrunners on the deal, JPMorgan and Lehman Brothers are co-syndication agents, SunTrust is administrative agent, and CIBC World Markets, Merrill Lynch and Wachovia Securities are co-documentation agents.

Proceeds were used to fund the acquisition of NeighborCare Inc., which was completed on July 28 - meaning the credit facility has already funded even though syndication has just started.

The company also has the option to get an additional $500 million 364-day loan facility after closing on this new deal. Proceeds from the incremental debt can be used for strategic acquisitions.

Omnicare is a Covington, Ky.-based provider of pharmaceutical care for the elderly. NeighborCare is a Baltimore, Md.-based institutional pharmacy provider serving long-term care and skilled nursing facilities, specialty hospitals, assisted and independent living communities, and other assorted group settings.

Calpine lower

Calpine Corp.'s second-lien term loan continued its downward spiral, closing out the day down by about a half a point to a point with levels quoted at 80½ bid, 81¼ offered, according to a trader.

San Jose, Calif.-based energy company, Calpine, revealed in its latest 10-Q filing that some of the proceeds from the Saltend Energy Centre sale were used to purchase gas as opposed to paying down second-lien debt, according to the trader.

As a result, the paper has spent the past two sessions weakening on investor disappointment that the previously anticipated pay down would not be taking place.

SunGard closes

Solar Capital Corp., formed by Silver Lake Partners, Bain Capital, The Blackstone Group, Goldman Sachs Capital Partners, Kohlberg Kravis Roberts & Co. LP, Providence Equity Partners and Texas Pacific Group, completed its $11.4 billion acquisition of SunGard Data Systems Inc., according to a news release.

To help fund the LBO, SunGard got a new $5 billion credit facility (B1/B+/BB-) consisting of a $4 billion 71/2-year term loan B with an interest rate of Libor plus 250 basis points and a $1 billion six-year revolver with an interest rate of Libor plus 275 basis points.

The term loan, which has a $500 million carve-out for European investors, was originally issued to investors with a discount of an eighth. Pricing on the B loan was reverse flexed from Libor plus 275 basis points during syndication, at which time 101 soft call protection for one year was added to the deal.

JPMorgan and Citigroup acted as joint lead arrangers on the deal, and JPMorgan, Citigroup and Deutsche Bank acted as joint bookrunners. JPMorgan also acted as administrative agent, Deutsche and Citi as co-syndication agents, and Goldman Sachs and Morgan Stanley as co-documentation agents.

The company also sold $3 billion in high-yield debt for LBO financing comprised of $1.6 billion of fixed-rate notes that priced at par to yield 9 1/8%, $400 million of floating-rate notes that priced at par to yield six-month Libor plus 450 basis points and $1 billion of 10-year senior subordinated notes that priced at par to yield 10¼%.

Sungard is a Wayne, Pa., provider of integrated software and processing solutions, primarily for financial services.

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