Open Solutions up on sale buzz; Hawker declines again; EP Energy, ThermaSys revise deals

By Sara Rosenberg

New York, April 9 - Open Solutions Inc.'s term loan was stronger in trading on Monday with chatter of a potential sale of the company, and Hawker Beechcraft Inc.'s strip of institutional bank debt continued its recent trend of daily losses.

Over in the primary, EP Energy Corp. revised its term loan B, increasing the size as its unsecured notes offering was downsized and setting official talk for coupon, Libor floor and original issue discount, and ThermaSys Corp. firmed pricing on its debt at the wide end of talk while tightening the discount price.

Additionally, Syniverse Technologies revealed guidance on its B loan with launch, and MegaPath Corp., Seitel Inc., AutoTrader.com and First American Payment Systems LP began circulating price talk on their upcoming deals.

Furthermore, On Assignment Inc. set its bank meeting date, and Pep Boys - Manny, Moe & Jack narrowed down expected timing on the launch of its credit facility.

Open Solutions rises

Open Solutions' term loan rallied to 95 bid, 98 offered from 91½ bid, 93½ offered on rumors that the company is up for sale by current owners Carlyle Group and Providence Equity Partners, according to a trader.

Late last week, the company said in a news release that it now has the "flexibility to consider a range of strategic initiatives" to strengthen its capital structure and continue to drive growth through its collaborative network and product suite.

The statement came as the company released performance results for the fourth quarter ended Dec. 31, which included sales bookings of $183 million, a 12% increase from the prior year, quarterly adjusted operating income that grew 20% from 2010 and quarterly cash flow generated from operations that was 47% higher than the previous year.

Open Solutions is a Glastonbury, Conn., provider of integrated enabling technologies for financial institutions.

Hawker Beechcraft still sliding

Hawker Beechcraft's strip of institutional bank debt fell to 65 bid, 67 offered from 66 bid, 67½ offered, bringing total losses in a week's time to around eight points, according to a trader.

The strip of loans came under heavy pressure last week because of ratings downgrades, a missed 10-K filing deadline, skipped April 2 interest payments on notes and news of expected 2011 losses from operations of roughly $481.8 million.

And, the week before that there were some additional losses on the loans as a result of earlier ratings downgrades, news of a forbearance agreement through June 29 with about 70% of credit facility lenders to defer interest payments and get covenant relief and completion of a new $124.5 million senior term loan due June 29 to fund ongoing operations.

Hawker is a Wichita, Kan.-based manufacturer of business, special mission, light attack and trainer aircraft.

EP Energy reworks loan

Moving to the primary, EP Energy came out with changes to its senior secured covenant-light term loan due 2018, reducing the size to $750 million from $500 million and releasing official talk at Libor plus 525 basis points with a 1.25% Libor floor, an original issue discount of 98 to 99 and 101 soft call protection for one year, a market source said.

By comparison, at launch, talk on the term loan had been whispered in the 7% context, with one source saying that at the all-in context, investors may be looking at pricing in the vicinity of Libor plus 550 bps with a 1.25% Libor floor and an original issue discount of 98 to 99.

Along with the term loan, the company is getting a $2 billion reserve-based revolver that is expected to have a pricing grid ranging from Libor plus 150 bps to 250 bps based on utilization and an unused fee ranging from 37.5 bps to 50 bps based on borrowing base usage.

Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., BMO Capital Markets Corp., RBC Capital Markets, UBS Securities LLC and Nomura are leading the deal, with Citi left lead on the term B, and JPMorgan left lead on the revolver.

EP Energy modifies notes

With the new term loan B size, EP Energy increased its senior secured notes due 2019 to $750 million from $500 million and decreased its senior unsecured notes due 2020 to $2 billion from $2.5 billion, the source remarked.

Because of the new structure, the term loan B and secured notes are expected to be rated at Ba3/BB-, versus Ba3/BB previously, and the unsecured notes are expected at B2/B, versus B1/B before, the source continued.

Price talk on the secured notes is in the 7% area and on the unsecured notes is in the 9½% area.

Books on the loan and notes close at 11 a.m. ET on Tuesday, with pricing expected thereafter, the source added.

EP Energy funding buyout

Proceeds from EP Eenrgy's term loan B, notes, $800 million of revolver borrowings and $3.2 billion of equity will be used to fund the purchase of the company.

Apollo Global Management LLC, Riverstone Holdings LLC, Access Industries Inc. and other investors are buying the company from El Paso Corp. for roughly $7.15 billion

Closing is expected in the second quarter, subject to the completion of the acquisition of El Paso by Kinder Morgan Inc.

EP Energy is a Houston-based oil and natural gas exploration and production company.

ThermaSys tweaks deal

ThermaSys firmed pricing on its $123 million of add-on loans at Libor plus 500 bps, the high end of the Libor plus 450 bps to 500 bps talk, and with the incremental debt, pricing on its existing $30 million revolver and roughly $112 million term loan is being changed to Libor plus 500 bps from Libor plus 450 bps, according to a market source.

In addition, the credit agreement now has a pricing grid as follows: Libor plus 450 bps at less than or equal to 3.75 times leverage; Libor plus 475 bps at greater than 3.75 times but less than or equal to 4.25 times leverage; Libor plus 500 bps at greater than 4.25 times but less than or equal to 5.00 times leverage; and, Libor plus 525 bps at greater than 5.0 times leverage, the source remarked.

As before, the new and existing bank debt includes a 1.25% Libor floor.

ThermaSys revises OID

With the pricing update, the original issue discount on ThermaSys' new debt, comprised a $15 million add-on revolver and a $108 million add-on term loan B, was moved to 99½ from 99, the source continued. By comparison, when done early this year, the existing facility was sold at an original issue discount of 99.

GE Capital Markets is the lead bank on the deal that will be used to fund an acquisition.

ThermaSys is a Montgomery, Ala.-based supplier of highly engineered copper/brass and aluminum heat exchanger components and assemblies.

Syniverse holds call

Syniverse launched a new credit facility with a conference call on Monday afternoon, at which time lenders were told that the proposed $925 million seven-year term loan B is being talked at Libor plus 350 bps with a 1.25% Libor floor and an original issue discount of 991/2, sources said.

Commitments towards the $1.075 billion credit facility, which also includes a $150 million five-year revolver, are due by the close of business on April 16, sources remarked.

Barclays Capital Inc., Credit Suisse Securities (USA) LLC and Deutsche Bank Securities Inc. are leading the deal that will be used to refinance an existing revolver and term loan that are priced at Libor plus 375 bps with a 1.5% Libor floor. When done in late 2010, the term loan was sold at an original issue discount of 99, while the revolver was sold at 981/2.

Syniverse is a Tampa, Fla.-based provider of technology and business services for the telecommunications industry.

MegaPath floats guidance

MegaPath has set a bank meeting for Wednesday morning to launch a $175 million credit facility, which is being talked at Libor plus 625 bps with a 1.25% Libor floor and an original issue discount that is still to be determined, according to a market source.

The facility is comprised of a $25 million five-year revolver and a $150 million six-year term loan, the source said.

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

Senior leverage is 2.1 times.

MegaPath is a provider of managed data, voice and security services.

Seitel reveals pricing

Seitel, meanwhile, joined the calendar with a Thursday bank meeting to launch a $275 million six-year term loan B, and talk has already been announced at Libor plus 700 bps with a 1.5% Libor floor and an original issue discount of 98 to 99, according to a market source.

Wells Fargo Securities LLC and Jefferies & Co. are the lead banks on the deal.

Proceeds will be used to take out the company's $275 million senior notes due Feb. 14, 2014.

Plans for the refinancing were disclosed last week, but details on how it would be done were unavailable.

Seitel is a Houston-based provider of seismic services to the energy industry.

AutoTrader talk emerges

AutoTrader.com released talk of Libor plus 225 bps on its $400 million of incremental pro rata debt, which is in line with the spread on its existing pro rata borrowings, according to a market source.

The new deal, which will launch with a conference call on Tuesday afternoon, consists of a $200 million incremental term loan A due 2017 and a $200 million incremental revolver due 2015.

Details on upfront fees are expected to come out on the call, the source said.

Wells Fargo Securities LLC is the left lead bank on the deal that will be used to fund a $400 million dividend.

AutoTrader.com is an Atlanta-based automotive marketplace and consumer information website.

First American spread

First American Payment Systems disclosed that its proposed $40 million incremental term loan is being talked at Libor plus 500 bps with a 1.75% Libor floor, in line with existing term loan pricing, a market source said, adding that original issue discount is still to be determined.

J.P. Morgan Securities LLC is leading the deal that will launch with a conference call at 2 p.m. ET on Tuesday.

Proceeds will be used to pay a distribution to shareholders.

First American Payment is a Fort Worth, Texas-based provider of payment processing services for credit card, debit card and check transactions.

On Assignment firms timing

In more primary happenings, On Assignment zeroed in on timing for the launch of its $540 million senior secured credit facility with the scheduling of a bank meeting for Wednesday, according to a market source.

The facility consists of a $50 million revolver that will be undrawn at close and a $490 million term loan, and official price talk is not available as ratings haven't been announced yet, the source said. However, the company did say in a PREM14A filing that is expects term loan pricing to be Libor plus 375 bps with a 1.25% Libor floor.

Wells Fargo Securities LLC, Bank of America Merrill Lynch and Deutsche Bank Securities Inc. are the lead banks on the deal.

On Assignment buying Apex

Proceeds from On Assignment's credit facility will be used to fund the purchase of Apex Systems Inc. for $383 million in cash and newly issued stock valued at $217 million, and to refinance debt at both companies.

At close, funded debt of the combined company will total about 3.75 times estimated pro forma adjusted EBITDA for the 12 months ended March 31.

Closing is expected in May, subject to approval by On Assignment's shareholders, regulatory approvals and other customary conditions.

On Assignment is a Calabasas, Calif.-based provider of professionals in the technology, health care and life sciences sectors. Apex is a Richmond, Va.-based information technology staffing and services firm.

Pep Boys targeted launch

Pep Boys is looking at April 18 at the probable date that its bank meeting will take place to launch its proposed $875 million senior secured credit facility, according to a market source. Previously, the deal was labeled as mid-April business.

The facility is expected as a $325 million asset-based revolver, a $425 million first-lien term loan and a $125 million second-lien term loan, based on filings with the Securities and Exchange Commission.

Credit Suisse Securities (USA) LLC and Barclays Capital Inc. are the lead banks on the term loans, and Wells Fargo Securities LLC and Barclays are leading the revolver.

Proceeds, along with up to $489 million in equity, will be used to fund the acquisition of the company by Gores Group for $15 per share in cash. The transaction is valued at around $1 billion.

Pep Boys, a Philadelphia-based automotive aftermarket chain, expects its buyout to close in the second fiscal quarter of 2012, subject to shareholder and regulatory approvals.

ResCare closes

In other news, ResCare Inc. completed its $375 million five-year senior secured credit facility Ba1/BB), according to an 8-K recently filed with the Securities and Exchange Commission.

The facility consists of a $200 million revolver, which was upsized from $175 million, and a $175 million term loan A.

Pricing on the tranches firmed in line with initial talk at Libor plus 275 bps, with the revolver having a 50 bps unused fee.

Bank of America Merrill Lynch, J.P. Morgan Securities LLC and RBC Capital Markets LLC led the deal that was used to refinance an existing revolver and term loan B.

ResCare is a Louisville, Ky.-based human services company that provides residential, therapeutic, job training and educational support.

AMN wraps deal

AMN Healthcare Services Inc. closed on its $250 million credit facility (Ba2/BB-) consisting of a $50 million five-year revolver and a $200 million six-year term loan B, according to an 8-K filed with the SEC.

The term loan is priced at Libor plus 475 bps with a step-down to Libor plus 450 bps when leverage is below 3.0 times. There is a 1.25% Libor floor and 101 soft call protection for one year, and it was sold at a discount of 99.

During syndication, pricing was revised from initial talk of Libor plus 500 bps with no step-down, and the discount tightened from 981/2.

SunTrust Robinson Humphrey Inc. and GE Capital Markets led the deal that was used by the San Diego-based health care staffing and workforce services company to refinance existing debt.

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