Micro Focus dips on acquisition, refi news; primary sees multiple launches, announcements

By Sara Rosenberg

New York, Sept. 8 – Micro Focus International plc’s term loan was a touch lower in trading on Thursday as the company announced plans to purchase Hewlett Packard Enterprise’s software business segment (HPE Software) and refinance existing banking facilities.

Over in the primary market, Quality Care Properties Inc., DTI Holdco Inc., Polycom Inc., Coinstar LLC, Monitronics International Inc., SIG Combibloc (Onex Wizard US Acquisition Inc./SIG Combibloc Purchase Co. Sarl) and Smart & Final Stores LLC, Surgery Center Holdings Inc. (Surgery Partners Inc.), Beacon Roofing Supply Inc. and Dexter Axle released price talk with launch.

Also, Dell Software Group released size, structure and price talk on its upcoming credit facility, Beasley Broadcast Group Inc. set the launch date for its new loan deal, and Landry’s Inc., American Bath Group LLC and GFL Environmental Inc. joined the near-term calendar.

Micro Focus softens

Micro Focus’ term loan dipped in the secondary market on Thursday to 100¼ bid, 100½ offered from 100 3/8 bid, 100 5/8 offered after the company revealed that it is buying HPE Software from Hewlett Packard Enterprise and will replace existing credit facilities in connection with the transaction, according to a trader.

The acquisition is valued at $8.8 billion. As part of the transaction, a $2.5 billion payment will be made to Hewlett Packard, a $400 million return of value payment will be made to Micro Focus shareholders, and American Depository Shares will be issued to Hewlett Packard shareholders so that immediately following completion they will own 50.1% of the fully diluted share capital of the combined group.

To help fund the transaction, Micro Focus has received a commitment for $5.5 billion of debt financing, including a $500 million revolver, from J.P. Morgan Securities LLC.

Pro forma net debt is expected to be 3.3 times.

Closing is expected in the third quarter, subject to the carve-out of the HPE Software business from Hewlett Packard, Micro Focus shareholder approval, regulatory approvals and other customary conditions.

Micro Focus is a Newbury, Berkshire-based enterprise software company.

Quality Care price talk

Switching to the primary market, Quality Care Properties held its bank meeting on Thursday, launching its $1 billion six-year term loan B with talk of Libor plus 475 basis points with a 1% Libor floor, an original issue discount of 99 and 101 soft call protection for one year, according to a market source.

The company’s $1.1 billion credit facility (B2/BB) also includes a $100 million five-year revolver.

Commitments are due at 5 p.m. ET on Sept. 22, the source said.

Barclays, Morgan Stanley Senior Funding Inc. and Deutsche Bank Securities Inc. are leading the deal that will be used with $750 million of seven-year second-lien debt to fund the spinoff of HCP Inc.’s HCR ManorCare portfolio of skilled nursing and assisted living assets, as well as some other assets, into an independent, publicly traded real estate investment trust.

First-lien leverage is 2.1 times, and total leverage is 3.8 times, the source added.

Quality Care, an Irvine, Calif.-based health care services provider, expects to close on its spin-off this year, subject to customary conditions.

DTI hosts meeting

DTI Holdco revealed talk of Libor plus 450 bps to 475 bps with a 1% Libor floor, an original issue discount of 99 and 101 soft call protection for six months on its $1,195,000,000 seven-year covenant-light term loan B that launched to investors via a bank meeting, a market source said.

The company’s $1,295,000,000 credit facility (B2/B) also includes a $100 million revolver.

Commitments are due on Sept. 21, the source added.

Bank of America Merrill Lynch, Goldman Sachs Bank USA, Antares Capital, Ares Capital Management LLC and Golub Capital LLC are leading the deal that will be used with up to $490 million in equity to fund the buyout of Epiq Systems Inc. by OMERS Private Equity and Harvest Partners LP for $16.50 per share in cash and combination of Epiq with DTI. The transaction has a total value of about $1 billion, including assumed debt.

Closing is expected in the fourth quarter, subject to shareholder and regulatory approvals, and other customary conditions.

DTI, which is majority-owned by OMERS, is an Atlanta-based legal process outsourcing company. Epiq is a Kansas City, Kan.-based provider of integrated technology and services for the legal profession.

Polycom releases terms

Polycom disclosed talk on its $750 million seven-year first-lien term loan (B1/B+) as Libor plus 575 bps to 600 bps with a 1% Libor floor, an original issue discount of 98 and 101 soft call protection for six months in connection with its bank meeting during the session, a source remarked.

Commitments are due on Sept. 22, the source added.

The company’s $975 million credit facility also includes a $50 million five-year revolver (B1/B+) and a $175 million eight-year second-lien term loan (Caa1/B-) that was privately placed.

Macquarie Capital (USA) Inc. is leading the deal that will be used with equity to fund the buyout of the company by Siris Capital Group LLC for $12.50 per share in cash, or about $2 billion, including outstanding debt.

The second-lien term loan was downsized from an originally anticipated size of $200 million as the sponsor was able to identify about $25mm of cash associated with tax recovery in the first 12 to 18 months post closing.

Closing is expected this quarter, subject to regulatory and shareholder approval, and other conditions.

Polycom is a San Jose, Calif.-based provider of secure video, voice and content solutions.

Coinstar reveals guidance

Coinstar held its bank meeting, and with the event, price talk on its first- and second-lien term loans was announced, according to a market source.

The $535 million seven-year covenant-light first-lien term loan (B1/B) is talked at Libor plus 425 bps to 450 bps with a 1% Libor floor, an original issue discount of 99 and 101 soft call protection for six months, and the $135 million eight-year covenant-light second-lien term loan (Caa1/CCC+) is talked in the Libor plus 875 bps area with a 1% Libor floor, a discount of 98.5 and hard call protection of 102 in year one and 101 in year two, the source said.

The company’s $745 million senior secured credit facility also includes a $75 million five-year revolver (B1/B).

Commitments are due on Sept. 21, the source added.

Coinstar lead banks

Bank of America Merrill Lynch, Jefferies Finance LLC, Credit Suisse Securities (USA) LLC, Barclays and Deutsche Bank Securities Inc. are leading Coinstar’s credit facility.

Proceeds will be used to back the buyout of Coinstar’s parent company, Bellevue, Wash.-based Outerwall Inc., by Apollo Global Management LLC for $52.00 per share in cash, or about $1.6 billion, including net debt.

Closing is expected during the third quarter, subject to satisfaction of a minimum tender condition, the receipt of regulatory approvals and other customary conditions.

Coinstar is a fully automated network of self-service coin-counting machines.

Monitronics floats talk

Monitronics released talk of Libor plus 500 bps to 525 bps with a 1% Libor floor, an original issue discount of 99 and 101 soft call protection for six months on its $700 million six-year term loan (B-) that launched to investors, a market source remarked.

Commitments are due at noon ET on Sept. 21, the source added.

Bank of America Merrill Lynch, Citigroup Global Markets Inc. and Credit Suisse Securities (USA) LLC are leading the deal that will be used with new notes to refinance revolver borrowings, a term loan due in 2018 and a term loan due in 2022.

Monitronics is a Dallas-based home security alarm monitoring company.

SIG Combibloc repricing

SIG Combibloc launched on its morning lender call a repricing of its $1,225,000,000 term loan due March 13, 2022 that is talked at Libor plus 300 bps with a 1% Libor floor and a par issue price, according to a market source.

The company also launched a repricing of its €1.05 billion term loan due March 13, 2022 at talk of Euribor plus 375 bps with no floor and an original issue discount of 99.875, the source said.

Current pricing on the U.S. and euro term loans is Libor/Euribor plus 325 bps with a 1% floor.

Consents are due by 5 p.m. ET on Sept. 16, the source added.

Barclays is leading the transaction.

SIG Combibloc is a Switzerland-based supplier of carton packaging and filling machines for beverages and food.

Smart & Final sets talk

Smart & Final Stores came out with talk of Libor plus 325 bps with a 0.75% Libor floor, an original issue discount of 99.5 to 99.75 and 101 soft call protection for six months on its extended $594.9 million senior secured covenant-light term loan B due Nov. 15, 2022 that launched with a morning call, a market source said.

The loan will extend/replace the company’s existing term loan B due Nov. 15, 2019 that is priced at Libor plus 325 bps with a 0.75% Libor floor.

Consents/commitments are due on Wednesday, the source added.

Morgan Stanley Senior Funding Inc. is leading the deal.

Smart & Final is a Commerce, Calif.-based warehouse-style, no membership fee, multi-format retailer serving households and smaller businesses.

Surgery Center launches

Surgery Center held a lender call in the morning to launch a repricing of its $937 million first-lien term loan at talk of Libor plus 375 bps with a 1% Libor floor, a par issue price and 101 soft call protection for six months, according to a market source.

Commitments are due on Sept. 15, the source added.

The repricing will take the term loan down from Libor plus 425 bps with a 1% Libor floor.

Jefferies Finance LLC is leading the deal that is expected to close within the next three to four weeks.

Surgery Center is a Nashville, Tenn.-based healthcare services company.

Beacon Roofing holds call

Beacon Roofing Supply held a lender call at 11 a.m. ET to launch a repricing of its $446.6 million covenant-light term loan B due October 2022 that is talked at Libor plus 275 bps with a 0.75% Libor floor, a par issue price and 101 soft call protection for six months, according to a market source.

The repricing will take the term loan down from Libor plus 300 bps with a 1% Libor floor.

Commitments are due on Sept. 15, the source said.

Wells Fargo Securities LLC and Citigroup Global Markets Inc. are leading the deal.

Beacon Roofing Supply is a Herndon, Va.-based distributor of roofing materials and complementary building products.

Dexter hits market

Dexter Axle launched with an afternoon call an $80 million add-on term loan talked at Libor plus 525 bps with a 1% Libor floor, in line with existing term loan pricing, and an original issue discount of 99.5, according to a market source.

Commitments are due in two weeks, the source said.

BNP Paribas Securities Corp. is leading the deal that will be used to fund an acquisition.

Dexter Axle is an Elkhart, Ind.-based designer and manufacturer of trailer axles, brakes and related components.

Dell Software details emerge

Dell Software will launch to investors at its 10 a.m. ET bank meeting in New York on Friday a $1.45 billion credit facility (B1/B), split between a $100 million revolver and a $1.35 billion six-year covenant-light first-lien term loan, a market source said.

The term loan is talked at Libor plus 550 bps with a 1% Libor floor, an original issue discount of 98.5 and 101 soft call protection for six months, the source continued.

Previously, timing on the bank meeting was known but details on the credit facility were unavailable.

Credit Suisse Securities (USA) LLC and RBC Capital Markets are leading the deal that will be used to help fund the buyout of the company by Francisco Partners and Evergreen Coast Capital from Dell Inc.

Commitments for the credit facility are due at 5 p.m. ET on Sept. 23, the source added.

Closing on the buyout is subject to customary regulatory review.

Dell Software is a provider of integrated software, identity and management solutions and network security solutions.

Beasley schedules launch

Also in the primary market, Beasley Broadcast Group emerged with plans to hold a bank meeting on the morning of Sept. 15 to launch its $285 million credit facility (B+), according to a market source. Previously, timing on the deal had been broadly categorized as September business.

The facility consists of a $20 million five-year revolver and a $265 million seven-year term loan B.

RBC Capital Markets LLC and U.S. Bank are leading the debt that will be used with cash from the balance sheet to fund the acquisition of Greater Media Inc. for about $100 million in cash and roughly $25 million in shares of Beasley’s class A common stock.

The shareholders of Greater Media will also receive the net cash proceeds from the sale of its tower assets, estimated to be about $20 million, and Beasley will refinance around $80 million of Greater Media’s debt.

Closing is expected in the fourth quarter, subject to regulatory approvals and other customary conditions.

Net total leverage is 4.4 times based on last-12-month June 30 adjusted EBITDA of $60.1 million.

Beasley is a Naples, Fla.-based large- and mid-size market radio broadcaster. Greater Media is a Braintree, Mass.-based broadcast company.

Landry’s joins calendar

Landry’s set a bank meeting for 2:30 p.m. ET on Monday to launch a $1.5 billion senior secured credit facility that consists of a $200 million five-year revolver and a $1.3 billion seven-year first-lien term loan, according to a market source.

Jefferies Finance LLC is the left lead on the deal.

Proceeds will be used with a $575 million senior notes offering to refinance existing debt, including 9 3/8% senior unsecured notes due 2020 and an existing senior secured credit facility, and to make a distribution to its indirect parent to redeem all of its outstanding 10.25% senior unsecured notes due 2018.

Landry’s is a Houston-based diversified restaurant, hospitality and entertainment company.

American Bath coming soon

American Bath Group scheduled a bank meeting for 2 p.m. ET in New York on Monday to launch a $465 million credit facility, according to a market source.

The facility consists of a $50 million revolver, a $320 million seven-year covenant-light first-lien term loan with a 1% Libor floor and 101 soft call protection for six months and a $95 million eight-year covenant-light second-lien term loan with a 1% Libor floor and call protection of 102 in year one and 101 in year two, the source said.

Commitments are due at 5 p.m. ET on Sept. 27.

Credit Suisse Securities (USA) LLC and RBC Capital Markets are leading the deal that will be used to help fund the buyout of the company by Lone Star Funds.

American Bath Group is a Savannah, Tenn.-based designer and manufacturer of fiberglass reinforced plastic, sheet molded compound, and acrylic bathtubs and showers.

GFL on deck

GFL Environmental set a bank meeting for Monday to launch a C$950 million credit facility, a market source said.

The facility consists of a C$340 million revolver, and a C$610 million term loan B split between a $370 million tranche and a C$130 million tranche, the source continued.

Barclays, BMO Capital Markets, Credit Suisse Securities (USA) LLC and Macquarie Capital (USA) Inc. are leading the deal that will be used to pay down some revolver borrowings, to refinance other debt and fund acquisitions.

GFL Environmental is a Vaughan, Ont.-based waste management services company.

Medical Depot readies close

In other news, Medical Depot Inc. is expected to close on its $40 million incremental term loan due September 2019 around the end of this month after syndicating successfully at initial terms, a market source remarked.

Pricing on the incremental term loan is Libor plus 425 bps with a 1% Libor floor, which matches pricing on the existing $220 million term loan, and it has an original issue discount of 99.5.

Capital One is leading the deal that will be used to fund a tack-on acquisition and for general corporate needs.

Medical Depot (doing business as Drive DeVilbiss Healthcare) is a Port Washington, N.Y.-based maker of medical equipment, including mobility, respiratory, bath and personal care, sleep, accessibility and rehabilitation products.

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