Herff pro rata sees interest, term B launch set; Petrohawk fills out; Goober nets orders; Masonite rises

By Sara Rosenberg

New York, Sept. 10 - Herff Jones' proposed revolver and term loan A debt has received a good amount of interest since marketing on these tranches began a few weeks ago, and now the company is ready to approach the institutional loan market as a retail bank meeting has been scheduled.

In more primary news, Petrohawk Energy Corp. closed the book on its revolving credit facility on Wednesday after raising more than the borrowing base, and then proceeded to allocate the deal and Goober Drilling has already amassed commitments towards its new deal.

Over in the secondary market, Masonite International Inc.'s term loan recouped its previous day losses plus some and LCDX 10 was a touch softer despite the slight gain in equities.

Herff gets solid response

Herff Jones has seen a strong response from banks, especially among agents, since first launching its pro rata tranches during the second week of August, and with that part of the process taken care of, a retail bank meeting to launch its term loan B has been set for Tuesday, according to a market source.

The pro rata debt consists of a $100 million five-year revolver and a $335 million five-year term loan A, with both of these tranches talked at t Libor plus 325 basis points with a 3% Libor floor, the source said.

There are already orders in the book for the deal, but only towards the revolver and the term loan A, since the term loan B was not previously up for sale, the source remarked, declining to comment on just how much in orders came in during the early round syndication.

The seven-year term loan B is sized at $300 million and price talk on this tranche is not yet available, however, it will carry a 3% Libor floor as well, the source continued.

Sizes on the term loan A and the term loan B are still a bit fluid, the source added.

Bank of America and Wachovia are the lead banks on the $735 million senior secured deal (Ba3/BB+), with Bank of America the left lead.

Proceeds will be used to help fund the acquisition of American Achievement Group Holding Corp., an Austin, Texas-based provider of commemorative jewelry, class rings, yearbooks, letter jackets and other jewelry, from Fenway Partners.

The transaction is subject to regulatory approvals and customary closing conditions.

Herff Jones is an Indianapolis-based manufacturer and publisher of educational products, recognition awards and graduation-related items sold to schools.

Petrohawk wraps up

Petrohawk completed syndication of its $1.5 billion five-year revolver as over $1.4 billion in orders were received from investors towards the deal that has an initial $1.1 billion borrowing base, according to a market source.

Allocations on the deal went out on Wednesday and closing is expected to take place within the next two days, the source said.

Pricing on the revolver can range from Libor plus 125 bps to 200 bps based on usage, and the commitment fee on the revolver can range from 30 bps to 37.5 bps.

Initially, pricing will be at the low end of the grid - Libor plus 125 bps - because the company's recent equity offering has repaid outstanding debt. In August, the company priced a public offering of 25 million shares of common stock at a price of $26.53 per share. Net proceeds from the offering are being used to repay the outstanding borrowings under the existing revolver, fund pending and additional leasehold acquisitions, fund a portion of the increased capital budget for this year and for general corporate purposes.

However, because of the company's active drilling program, there is expected to be future usage under the borrowing base.

Upfront fees on the deal were: For new money, investors were offered 30 bps for orders of $50 million, 40 bps for orders of $75 million and 50 bps for orders of $125 million while existing lenders were offered a 25 bps upfront fee for rolling over their commitments into the new deal.

BNP Paribas is the lead bank on the new revolver that will be used to refinance existing debt.

Petrohawk is a Houston-based acquirer, developer, producer and explorer of oil and natural gas properties.

Goober Drilling moving along

Goober Drilling's $230 million asset-based credit facility is heard to be coming along fine in terms of syndication as the deal had a pretty successful early marketing round, according to a market source.

The source said that prior to last Thursday's bank meeting, two-thirds of the facility was already filled.

The facility consists of a $140 million revolver and a $90 million term loan, with pricing on both tranches able to range from Libor plus 275 basis points to 350 bps based on leverage.

Investors are being offered tiered upfront fees based on commitments.

Jefferies is the lead bank on the deal that will be used to refinance existing debt.

Goober Drilling, owned by Leucadia National Corp. Chartwell Investments and management, is a Stillwater, Okla., provider of contract drilling services for oil and gas exploration and production companies.

1-800 Contacts chugging along

Talk is that 1-800 Contacts Inc.'s $194 million credit facility has so far only received a few orders from lenders, according to a market source.

However, the deal was just launched to investors last Thursday and it's still very early in the syndication proceeds since commitments aren't due until Sept. 18, the source said.

The facility consists of a $179 million first-lien term loan and a $15 million revolver, with both tranches talked at Libor plus 395 bps with a 3.75% Libor floor.

Unofficial original issue discount guidance is the 96 area. Official talk on the discount is not out as of yet as the banks are waiting for some feedback from lenders.

The term loan has 101 soft call protection for one year.

Currently, investors are expecting three-B corporate ratings.

JPMorgan is the lead bank on the deal that will be used to back the buyout of the company by Fenway Partners LLC, which was already completed about a year ago.

When that buyout was announced, it was said that the company was getting a $235 million senior secured credit facility, consisting of a $20 million six-year revolver expected at Libor plus 275 basis points, a $140 million seven-year first-lien term loan expected at Libor plus 275 bps and a $75 million 71/2-year second-lien term loan expected at Libor plus 625 bps.

1-800 Contacts is a Draper, Utah, direct marketer of replacement contact lenses.

Masonite strengthens

Switching to trading news, Masonite's term loan gained quite a bit of ground during Wednesday's session, although there was no particular news seen behind the momentum, according to a trader.

The term loan was quoted at 83¼ bid, 83¾ offered, up from Tuesday's levels of 82 bid, 83 offered, the trader said.

"I think there's some better buyers at these levels," the trader said in explanation of why the paper moved up.

On Tuesday, the term loan had weakened by half a point as the company held a lender call to discuss its situation.

Sources had said that the expectation is that Masonite is heading towards bankruptcy because of all the obstacles it is facing, such as a bond coupon due Oct. 15 and being unable to get a loan forbearance agreement.

Another hint towards bankruptcy, sources said, is that the company hired a financial advisor.

As has been previously reported, the company has been negotiating an amendment and a waiver of non-compliance with its adjusted EBITDA and interest coverage ratios with its credit facility lenders for a while.

The company's net debt to trailing 12 months adjusted EBITDA ratio was 8.25 times at June 30, compared to a covenant maximum of 7.00 times and its cash interest coverage ratio was 1.51 times at June 30, compared to a covenant minimum of 1.65 times.

Masonite is a Tampa, Fla.-based manufacturer of residential and commercial doors.

LCDX dips

Also in trading, LCDX 10 was slightly weaker on the day even though stocks posted a modest gain, and the loan cash market in general was unchanged to slightly lower, according to a trader.

The index was quoted at 97.05 bid, 97.15 offered, down from 97.15 bid, 97.25 offered, the trader said.

"No real reason for it to be down. It's probably just technical," the trader added.

As for stocks, Nasdaq closed up 18.89 points, or 0.85%, Dow Jones Industrial Average closed up 38.19 points, or 0.34%, S&P 500 closed up 7.53 points, or 0.61%, and NYSE closed up 86.11 points, or 1.09%.

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