Vizient, Keurig break; TransDigm weakens with numbers; Fieldwood Energy drops on downgrade

By Sara Rosenberg

New York, Feb. 9 – Vizient Inc.’s credit facility freed up for trading on Tuesday, with the term loan quoted above its original issue discount, and Keurig Green Mountain Inc.’s U.S. term loan B hit the secondary too once size and issue price firmed up.

In more trading news, TransDigm Group Inc.’s term loan C was softer with disappointing first quarter earnings results, and Fieldwood Energy LLC’s term debt retreated on the back of a ratings downgrade.

Switching to the primary market, Endurance International Group Holdings Inc. (EIG Investors Corp.) withdrew syndication of its incremental term loan, and Solera Holdings Inc. disclosed price talk on its term loan B in connection with its bank meeting.

Vizient starts trading

Vizient’s credit facility broke for trading on Tuesday, with the $1,275,000,000 seven-year secured term loan quoted at 97¾ bid, 98¾ offered, according to a trader.

Pricing on the term loan is Libor plus 525 basis points with a 1% Libor floor, and it was sold at an original issue discount of 97. The debt has 101 soft call protection for one year.

During syndication, the term loan was downsized from a revised amount of $1,375,000,000 and a launch size of $1,475,000,000, pricing was raised from Libor plus 500 bps, the original issue discount was changed from 98, the call protection was extended from six months, and the 12 months MFN sunset was removed.

Also during syndication, a net senior secured leverage ratio starting at 5 times was added so that the term loan was no longer covenant-light, and the incremental allowance was modified to $90 million, subject to total leverage of 5.75 times, plus an unlimited amount subject to a senior secured leverage ratio of 3.75 times, from an unlimited amount subject to senior secured leverage of 4.5 times.

Vizient getting revolver

In addition to the term loan, Vizient’s $1,375,000,000 credit facility includes a $100 million five-year unfunded revolver that was upsized recently from $75 million.

Barclays is leading the deal that will be used to help fund the purchase of the Spend and Clinical Resource Management and Sg2 businesses from MedAssets Inc.

Other funds for the transaction will come from a $600 million bond offering that was upsized from a revised amount of $500 million and an initial amount of $400 million, in conjunction with the term loan downsizings.

Closing on the acquisition is expected this quarter.

Vizient is an Irving, Texas-based network of not-for-profit health care organizations.

Keurig tops OID

Keurig’s $1,875,000,000 U.S. seven-year covenant-light term loan B freed up as well, with levels seen at 98¼ bid, 98¾ offered, a trader remarked.

Pricing on the U.S. term loan B is Libor plus 450 bps with a 0.75% Libor floor, and it was sold at an original issue discount of 98. The debt has 101 soft call protection for one year.

The company’s $6.4 billion senior secured deal (Ba3/BB) also includes a $500 million five-year revolver, $3,075,000,000 five-year term loan A and a $950 million equivalent euro seven-year covenant-light term loan B.

The euro term loan B is priced at Euribor plus 425 bps with a 0.75% floor, was issued at 98, and includes 101 soft call protection for one year.

During syndication, the U.S. term loan B was downsized from $2,675,000,000, the euro term loan B was upsized from €250 million, and the term loan A was upsized from $2.95 billion. Also, pricing on the term B debt was increased from talk of Libor/Euribor plus 375 bps to 400 bps, the discount on the B loans firmed at the wide end of revised talk of 98 to 98.5 and wide of initial talk of 99, and the call protection was extended from six months.

Keurig being acquired

Proceeds from Keurig’s credit facility and about $8.5 billion in equity will be used to fund the acquisition of the company by a JAB Holding Co.-led investor group for $92.00 per share in cash, or a total equity value of about $13.9 billion, and to refinance existing debt.

J.P. Morgan Securities LLC, Goldman Sachs Bank USA, Morgan Stanley Senior Funding Inc., BNP Paribas Securities Corp., Citigroup Global Markets Inc., HSBC Securities (USA) Inc. and Rabobank are leading the credit facility.

JAB is buying Keurig in partnership with strategic minority investors who are already shareholders in Jacobs Douwe Egberts BV, a coffee company, including Mondelez International and entities affiliated with BDT Capital Partners.

Closing is expected on or about Feb. 29, subject to customary conditions, including receipt of regulatory approvals and shareholder approval. The transaction is not subject to a financing condition.

Keurig is a Waterbury, Vt.-based personal beverage system company.

TransDigm loan dips

Also in trading, TransDigm’s term loan C fell after the company released results for the first quarter in fiscal 2016 that “missed” analyst projections, a trader said.

The term loan C was quoted at 97 bid, 97¾ offered, down from 97½ bid, 98 offered, the trader said.

For the first quarter, the company had net income of $114.9 million, or $1.97 per share, compared to net income of $95.5 million, or $1.63 per share in the previous year’s first quarter.

Net sales for the quarter were $701.7 million, versus $586.9 million last year, and EBITDA was $319.4 million, compared to $269.7 million in the fiscal year 2015 first quarter.

TransDigm outlook is good

The trader went on to say that things weren’t all negative for TransDigm as fiscal 2016 financial guidance “was pretty good”. The company increased full year guidance primarily to reflect the recent acquisition of Breeze-Eastern, current market conditions and its first quarter performance.

For fiscal 2016, the company is estimating net income in the range of $539 million to $553 million, versus $526 million to $540 million previously, and earnings per share in the range of $9.48 to $9.72 per share, versus $9.20 to $9.44 per share previously.

Also, net sales for fiscal 2016 are now expected in the range of about $3.14 billion to about $3.19 billion, versus $3.07 billion to $3.12 billion previously, and EBITDA is expected in the range of roughly $1.43 billion to roughly $1.45 billion, versus about $1.41 billion to about $1.43 billion previously.

TransDigm is a Cleveland, Ohio-based designer, producer and supplier of highly engineered aircraft components.

Fieldwood slides

Fieldwood Energy’s term loans weakened in the secondary following downgrades by Moody’s Investors Service to the company’s corporate rating to Caa3 from B2, senior secured first-lien term loan to Caa1 from Ba2 and senior secured second-lien term loan to Ca from B3, according to a trader.

The first-lien term loan was quoted at 59 bid, 61 offered, down from 63 bid, 65 offered, and the second-lien term loan was quoted at 15½ bid, 17½ offered, down from 16 bid, 18 offered, the trader said.

Moody’s explained the downgrade in ratings reflect the company’s unsustainable capital structure, weak liquidity and an expectation of continued degradation in leverage and coverage metrics through 2017 as existing hedges roll off.

The ratings agency went to remark that based on its expectations for low oil and natural gas prices over the next several years, its believes Fieldwood’s debt will likely need to be restructured.

Fieldwood is a Houston-based private oil and gas exploration & production company.

Endurance pulled

Moving to the primary market, Endurance International withdrew syndication of its $735 million incremental seven-year first-lien term loan as a result of poor market conditions, a source remarked.

The loan had been talked at Libor plus 500 bps with a 1% Libor floor and an original issue discount of 98.

Although it didn’t syndicate, funding of the loan by the lead banks did take place at pricing of Libor plus 500 bps with a 1% Libor floor and a discount of 97, subject to the payment of an additional upfront fee of 100 bps on Feb. 28 under certain circumstances.

Due to the most-favored nation pricing provision in the company’s existing credit agreement, pricing on its existing term loans increased to Libor plus 523 bps, stepping up to Libor plus 548 bps on Feb. 28 under certain circumstances, with a 1% Libor floor.

The company also got a new $165 million five-year revolver priced at Libor plus 400 bps, subject to a leverage-based step-down, a company news release said. This tranche was downsized from $175 million during the syndication attempt.

Endurance lead banks

Credit Suisse Securities (USA) LLC, Goldman Sachs Bank USA and Jefferies Finance LLC acted as the leads on Endurance’s $900 million of bank debt (B1/B).

Proceeds were used with $350 million of senior unsecured notes to fund the acquisition of Constant Contact Inc. for $32.00 per share in cash, for a value of about $1.1 billion.

Endurance is a Burlington, Mass.-based provider of web hosting and online services. Constant Contact is a Waltham, Mass.-based online marketing company.

Solera reveals talk

Solera Holdings held its bank meeting on Tuesday morning, launching its $1.9 billion seven-year covenant-light term loan B with talk of Libor plus 450 bps to 475 bps with a 1% Libor floor, an original issue discount of 98 and 101 soft call protection for six months, a market source said.

The company’s $2.2 billion senior secured credit facility (Ba3/B) also includes a $300 million revolver.

Commitments are due during the week of Feb. 22, the source added.

Goldman Sachs Bank USA, Citigroup Global Markets Inc., Jefferies Finance LLC, Macquarie Capital (USA) Inc., Nomura Securities International Inc. and UBS AG are leading the deal that will be used with $2.03 billion of senior notes, over $3 billion in equity and cash on hand to fund the buyout of the company by Vista Equity Partners for $55.85 per share. The transaction is valued at $6.5 billion, including Solera’s existing net debt.

Closing is expected during the week of Feb. 29.

Solera is a Westlake, Texas-based provider of software and services to the automobile insurance claims processing industry.

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