Fresenius reveals OID; Petrohawk nets orders; MBF timing emerges; Weather Channel breaks

By Sara Rosenberg

New York, Sept. 8 - On Monday, talk surfaced on the original issue discount for Fresenius Kabi's term loan B as the deal was launched to retail investors in Frankfurt and is getting ready to launch to U.S. guys later this week.

In more primary happenings, Petrohawk Energy Corp.'s revolving credit facility is close to being fully syndicated and the anticipation is that after giving a few more days for orders to come in, the deal will wrap up at initial terms, and MBF Healthcare Acquisition Corp. firmed up timing on the launch of its proposed credit facility.

Meanwhile, over in the secondary market, Weather Channel's credit facility freed up for trading, LCDX 10 rose with stocks, and UAL Corp.'s term loan held steady during a day that featured false bankruptcy rumors and an interruption in the trading of the company's stock.

Fresenius Kabi disclosed the proposed original issue discount on its $1 billion six-year term loan B as the overseas retail marketing period began on Monday and the U.S. retail marketing phase is slated to begin on Wednesday, according to an informed source.

The term loan B is being offered to investors at an original issue discount of 99, the source said.

As was previously reported, price talk on the term loan B is Libor plus 350 basis points with a 3.25% Libor floor.

The company's $2.45 billion senior credit facility (Baa2) also includes a $450 million five-year revolver and a $1 billion five-year term loan A, with both of these tranches talked at Libor plus 287.5 bps.

Commitments are due from lenders on Sept. 22.

Prior to the start of the retail syndication round, the structure on the facility had been changed as a result of strong demand during the senior managing agents round.

Under the original structure, the term loan A was expected to be sized at $900 million and the term loan B was expected to be sized at $850 million.

The additional term loan funds were taken out of the bridge loan commitment, which was revised to $1.3 billion from $1.65 billion. This bridge financing could be replaced by high-yield financing opportunities.

Fresenius said in August that during the senior managing agents phase of syndication, 20 of its key relationship banks from Europe, North America and Japan, acting as mandated lead arrangers and joint lead arrangers, provided strong commitments towards the deal, oversubscribing the target amount.

Deutsche Bank, Credit Suisse and JPMorgan are the senior mandated lead arrangers on the credit facility, with Deutsche Bank the global coordinator.

The revolver has $200 million of uncommitted availability. Of the revolver amount, $150 million will be made available to APP Pharmaceuticals Inc. and $300 million, along with the $200 million uncommitted, will be made available to a financing subsidiary of Fresenius.

Financial covenants under the facility include a consolidated leverage ratio, a consolidated fixed-charge coverage ratio, an interest expense coverage ratio and limits amounts spent on capital expenditure.

Proceeds from the facility, along with the bridge loan, will be used to help fund the acquisition of APP Pharmaceuticals, refinance APP's existing senior credit facility, and for general corporate and working capital purposes.

Under the agreement, Fresenius Kabi will purchase APP for $23 per share and a registered and tradeable contingent value right that could deliver up to $6 per share, payable in 2011, if APP exceeds a cumulative adjusted EBITDA target for 2008 to 2010.

Based on the cash purchase price, the transaction values the fully diluted equity capital of APP at about $3.7 billion, and with the contingent value right, if fully realized, at a value of $4.6 billion.

Fresenius will also assume all of APP's outstanding debt, which totals about $940 million, net of cash. So, in total, the consideration for the acquisition could be up to $5.6 billion.

The transaction is expected to close at the end of 2008 or beginning of 2009, subject to certain conditions, including regulatory approvals, and approvals under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

Fresenius Kabi is a Bad Homburg, Germany, infusion therapy and clinical nutrition company. APP is a Schaumburg, Ill., hospital-based injectable pharmaceutical company.

Petrohawk filling up

Petrohawk's $1.5 billion five-year revolver is more than two thirds of the way done and the book is going to be held open for a couple more days to allow a few banks to complete their credit work, according to a market source.

As of the close of business Friday, there was over $1.1 billion in orders towards the revolver, the source said.

It is currently expected that original deal terms and pricing will be the final structure on the revolver, the source added.

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 are, for new money, investors are being offered 30 bps for orders of $50 million, 40 bps for orders of $75 million and 50 bps for orders of $125 million. Existing lenders will be paid 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.

The initial borrowing base on the revolver is set at $1.1 billion.

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

MBF reveals launch date

MBF Healthcare released timing on its proposed $209 million senior secured credit facility as a bank meeting has been scheduled to take place on Oct. 1, according to a market source.

Previously, the deal was thought to likely be late September business.

The facility consists of a $25 million revolver, a $142 million funded term loan and a $42 million delayed-draw term loan, with tranche sizes subject to slight change, the source said.

CIT and Jefferies are the lead banks on the deal, with CIT the left lead.

Proceeds will be used to help fund the acquisition of Critical Homecare Solutions Holdings Inc. from Kohlberg & Co. LLC.

Other financing will come from $67 million of mezzanine debt.

Originally, the company had received a commitment for an up to $285 million senior secured credit facility from Jefferies, consisting of a $25 million five-year revolver, a $140 million to $155 million five-year first-lien term loan, a $20 million first-lien one year delayed-draw, with a five-year final maturity, term loan, and a $40 million to $85 million six-year second-lien term loan.

This initial credit facility commitment, however, expired on July 31, so the parties worked to get a new commitment and achieved their goal on Aug. 28, a day before the deadline that would have allowed for the termination of the acquisition.

In connection with getting the new financing commitment, the acquisition agreement was amended to extend the termination date to Oct. 31.

The enterprise value of the transaction is estimated at $479 million. Originally, it was estimated at $534 million, but was restructured this summer.

MBF Healthcare is a Coral Gables, Fla., blank check company formed to acquire businesses in the health care industry. Critical Homecare Solutions is a Conshohoken, Pa., provider of comprehensive home infusion therapy and specialty infusion services.

Weather Channel frees to trade

Switching to the secondary, Weather Channel's credit facility started trading on Monday, with the term loan seen above its original issue discount price, according to sources.

The $1.07 billion term loan was quoted at 99¼ bid, par¼ offered, sources said.

Pricing on the term loan is Libor plus 400 bps with a step-down to Libor plus 375 bps when total leverage is 5¼ times and a 3.25% Libor floor, and the debt was sold to investors at an original issue discount of 97.

During syndication, the term loan was upsized from $1.02 billion and pricing was reduced from Libor plus 425 bps on strong demand.

When initial guidance emerged on the term loan, it was said that the deal was being talked in the area of Libor plus 400 bps to 425 bps with an original issue discount in the range of 97 to 98; however, after a conference call with select investors was held, which was the only launch into syndication that the deal experienced, price talk was focused on Libor plus 425 bps at a discount of 97.

Weather Channel's $1.22 billion credit facility (Ba2/BB) also includes a $150 million revolver priced at Libor plus 400 bps.

Deutsche Bank and GE Capital Markets are the co-lead arrangers on the credit facility, with Deutsche the left lead.

Proceeds will be used to help fund the acquisition of the company by NBC Universal, Bain Capital and Blackstone Group from Landmark Communications for about $3.5 billion.

Other financing for the buyout is coming from $610 million of mezzanine debt. The mezzanine was initially going to be sized at $660 million, but it was reduced as a result of the term loan upsizing.

Total leverage is 6.7 times. Senior secured leverage is 4.3 times, up from an original 4.1 times because of the additional term loan debt.

Following completion of the buyout, Weather Channel will be operated as a separate entity, based in Atlanta, with management services to be provided by NBC Universal.

The transaction includes The Weather Channel Networks, the third-most distributed cable network, The Weather Channel Interactive, which includes the web site weather.com, and Weather Services International, a weather forecasting provider.

The credit facility actually allocated back in July, but because the acquisition wasn't going to close for a while, the banks held off on freeing the deal up for trading.

LCDX heads up

LCDX 10 gained some ground during market hours as the stock market showed an improvement, according to a trader.

The index was quoted at 97.40 bid, 97.50 offered, up from Friday's levels of 97.25 bid, 97.35 offered, the trader said.

Nasdaq ended up 13.88 points, or 0.62%, Dow Jones Industrial Average ended up 289.78 points, or 2.58%, S&P 500 ended up 25.48 points, or 2.05%, and NYSE ended up 134.86 points, or 1.68%.

UAL steady

Also in trading, UAL's term loan remained firm on Monday although the company had its share of drama as a false bankruptcy story was printed causing a sharp decline in its stock, followed by a stoppage and then resumption of trading in the stock, according to a trader.

The term loan was quoted at 72½ bid, 73½ offered, unchanged from Friday's closing levels, the trader said.

"When the fake news came out, there was a lot of inquiry but nothing traded during that time. It hasn't been very active," the trader added.

Around midday, UAL came out with a statement claiming that the reports that it filed for bankruptcy are completely untrue and were caused by the "irresponsible posting of a six-year-old Chicago Tribune article by the Florida Sun Sentinel newspaper web site with the date changed."

UAL also said that the story was related to its 2002 bankruptcy filing, and that it demanded a retraction from the newspaper and is launching an investigation into the matter.

The company added that it "continues to execute its previously announced business plan to successfully navigate through an environment marked by volatile fuel prices and continues to have strong liquidity."

UAL is a Chicago-based airline company.

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