WeightWatchers.com talk emerges; Rhodes cuts size; Tronox nets orders; Quality Home Brands breaks

By Sara Rosenberg

New York, Nov. 3 - WeightWatchers.com came out with price talk on its new credit facility as the deal launched via a bank meeting Thursday. And, Rhodes Homes made some more changes to its facility, this time slashing the overall deal size by $50 million.

In other primary doings, Tronox Inc.'s credit facility has already gotten some commitments in from lenders since launching via a bank meeting just this past Wednesday.

As for the secondary, Quality Home Brands freed up for trading, with the first-lien term loan trading in the upper-par to 101 context, Revlon Inc. weakened on poor earnings numbers and Primedia Inc. traded up on pay down speculation.

WeightWatchers.com announced opening price talk on its $220 million credit facility at its launch Thursday - with the $150 million five-year first-lien term loan (Ba3) talked at Libor plus 225 basis points and a $70 million 51/2-year second-lien term loan (B1) talked at Libor plus 500 basis points, according to a market source.

Credit Suisse First Boston is lead on the deal.

Proceeds will be used to help fund the purchase of all of the equity interest in WeightWatchers.com, including that owned by Artal Luxembourg, resulting in WeightWatchers.com becoming a 100% wholly owned subsidiary of Weight Watchers International Inc.

The cost to acquire and redeem all of the interest not currently owned by Weight Watchers International is $389 million in cash and is based on an enterprise valuation of $552 million for the WeightWatchers.com business.

Weight Watchers is a Woodbury, N.Y., provider of weight loss services.

Rhodes downsizes

Rhodes Homes reduced the size of its credit facility to $550 million from $600 million by reducing its first- and-second-lien term loans by $25 million each, according to a market source.

This change in tranche sizes comes on the heels of Monday's increase to pricing on both term loan tranches, the addition of original issue discounts and the addition of soft call protection to the first-lien term loan.

The five-year first-lien term loan B (Ba3/B+) is now sized at $425 million, compared to an original size of $450 million, the source said. Pricing is set at Libor plus 325 basis points after flexing up earlier this week from 275 basis points, and soft call protection was recently added of 102 in year one, 101 in year two and par thereafter.

The 51/2-year second-lien term loan (B1/B-) is now sized at $125 million, compared to an original size of $150 million. Pricing on the tranche is set at Libor plus 750 basis points after flexing up from Libor plus 600 basis points at the start of the week. Call protection on the second-lien term is, and has been since launch, 103 in year one, 102 in year two, 101 in year three and par thereafter.

Both the first- and the second-lien term loans are being offered to investors at an original issue discount of 99.5, which was also added at the start of this week, as opposed to par where they were originally being offered.

There were some other changes as well to the credit agreement on Monday, such as speculative building of homes is limited to 5% of total value and acquisitions of un-entitled land not adjacent to entitled or developed land is capped at $25 million per year.

Also, the company will have to maintain a minimum of $25 million cash at all times and a $50 million interest reserve has been established (which would cover one year's interest expense).

Some market players think that the Rhodes credit facility was having some trouble getting off the ground with the original structure for a variety of potential reasons, including data emerging that some hot housing markets were starting to cool, the general malaise in the high-yield market spilling into loans and buyers wanting risks more constrained.

Credit Suisse First Boston is the lead arranger on the facility that will be used by the Las Vegas-based homebuilder to refinance existing debt, fund future development and land acquisition costs and fund an approximately $100 million dividend.

Tronox sees demand

Tronox's $450 million senior secured credit facility (Ba2/BB-) has "good momentum from other managing agents at this point," with orders rolling in since syndication officially kicked off this past Wednesday, according to a market source.

The facility consists of a $200 million six-year term loan talked at Libor plus 175 basis points and a $250 million five-year revolver talked at Libor plus 175 basis points, the source said.

The term loan and the revolver are being sold pro-rata, meaning that in order to commit to one of the tranches you must commit to the other tranche as well.

Lehman Brothers and Credit Suisse First Boston are the lead banks on the deal, with Lehman the left lead.

The credit facility is being obtained in connection with Tronox's spinoff from Kerr-McGee Corp. through an initial public offering of shares of class A common stock that is expected to take place in the fourth quarter.

Following the IPO, Kerr-McGee will continue to hold an interest through ownership of Tronox's class B common stock, with those shares expected to be distributed to stockholders through a spinoff or split off during 2006.

Proceeds from the term loan and a planned offering of $350 million unsecured notes due 2012 will be distributed to Kerr-McGee.

Tronox is an Oklahoma City-based chemical business.

Polymer firms price talk

Polymer Group Inc. announced opening spreads of Libor plus 200 basis points on both its $405 million seven-year term loan B and its $50 million five-year revolver at Thursday's launch, according to a market source.

Previously, price talk on the revolver was unavailable and price talk on the term loan was said to be in the Libor plus 200 basis points area, depending on ratings.

Proceeds from the $455 million credit facility (B1/BB-) will be used to refinance the company's existing credit facility that consists of a $280 million first-lien term loan B, a $125 million second-lien term loan C and a $50 million revolver.

Essentially, the company is looking to roll its existing first-lien term loan B and second-lien term loan C into one large first-lien term loan to lower overall cost of debt and simplify the capital structure.

Citigroup is the lead bank on the deal.

Polymer Group is a North Charleston, S.C., technology-driven developer, manufacturer and marketer of engineered materials.

RGIS flexes up

RGIS Inventory Specialists flexed pricing higher on its $350 million term loan B (B2/B+) to Libor plus 275 basis points from original price talk at launch of Libor plus 250 basis points, according to a market source.

At the end of October, the company had already increased pricing on its $150 million second-lien term loan (B3/B-) to Libor plus 700 basis points from original price talk at launch of Libor plus 600 basis points.

The company's facility also contains a $70 million revolver (B2/B+).

JPMorgan is the lead bank on the $570 million credit facility that will be used to pay a dividend to shareholders.

RGIS is an Auburn Hills, Mich., third-party inventory taker.

NextMedia shifts funds, tweaks spreads

NextMedia Operating Inc. moved $20 million out of its second-lien term loan and into its first-lien term loan, while at the same time increasing pricing on the second lien and decreasing pricing on the first lien.

The first-lien term loan B (B1/B) is now sized at $260 million, up from an original size of $240 million, and pricing was reverse flexed to Libor plus 200 basis points from original price talk at launch of Libor plus 225 basis points, according to a market source.

Meanwhile, the second-lien term loan (B3/CCC+) is now sized at $80 million, down from an original size of $100 million, and pricing was flexed higher to Libor plus 450 basis points from original price talk at launch of Libor plus 400 basis points, the source said.

NextMedia's $390 million credit facility also contains a $50 million revolver (B1/B).

Goldman Sachs & Co. and GE Capital Corp. are the lead banks on the deal, with Goldman the left lead.

Proceeds from the facility will be used to fund a tender offer for the company's $200 million of 10¾% senior subordinated notes due 2011, to refinance a revolver and to fund the purchase of undisclosed assets.

NextMedia is a Denver-based diversified out-of-home media company.

J. Crew proposes delayed-draw structure

J. Crew Group Inc. has shifted its $295 million term loan (Ba3/B+) to a delayed structure since the company's initial public offering has been pushed off until next year, but not all are convinced that this new structure will survive the recommitment process.

The company has decided to push its IPO off until next year because it doesn't want to launch the offering during the holiday season, accounts explained. And, being that the term loan is contingent on the IPO being completed, the desire was to keep the already marketed deal intact by simply switching it to a short-term delayed-draw piece of paper.

The term loan is delayed draw through March 21, 2006, with the ability to extend until May 21, 2006 with 50% lender approval.

Lenders would get a 50 basis point undrawn fee through the end of January 2006, which would then increase to 75 basis points from February 2006 through March 21, 2006 and again to 100 basis points if the delayed draw is extended until May 21, 2006, accounts said.

Interest on the term loan would still be Libor plus 225 basis points, and the tranche would have a seven-year final maturity.

"There's well north of a billion in orders. Given the size of the order book it should be OK," one investor said.

However, another investor was of a different mind set saying that the delayed-draw structure that is being proposed "will probably change again given that most CLOs aren't able to participate in delayed draws."

Goldman Sachs and Bear Stearns are the lead banks on the deal, with Goldman the left lead.

New York-based apparel and accessories retailer J. Crew will use the term loan, along with proceeds from the IPO, to redeem all $92.8 million 14½% cumulative preferred stock, all $32.5 million 14½% cumulative redeemable preferred stock, all $21.7 million 13 1/8% senior discount debentures due 2008 and all or a portion of the 9¾% senior subordinated notes due 2014.

Quality Home Brands breaks

Quality Home Brands allocated its new credit facility, with the $133 million six-year first-lien term loan quoted at par ½ bid for $2 million, 101 offered for $2 million from the break until the close, according to a buyside source. During the session, the paper did trade a couple of times at 101, a trader added.

The first-lien term loan is priced with an interest rate of Libor plus 275 basis points. During syndication the tranche was upsized from $125 million and reverse flexed from Libor plus 300 basis points.

Quality Home Brands' $183 million credit facility also contains a $20 million five-year revolver with an interest rate of Libor plus 300 basis points and a $30 million seven-year second-lien term loan with an interest rate of Libor plus 700 basis points. During syndication, the second-lien loan was downsized from $40 million and flexed higher from Libor plus 650 basis points.

Bear Stearns is the sole lead bank on the deal that will be used by the newly formed lighting company to fund Murray Feiss Import LLC's acquisition of Sea Gull Holdings.

Murray Feiss, a Quad-C portfolio company, is a Bronx, N.Y., supplier of indoor and outdoor residential lighting products.

Revlon weaker

Revlon's bank debt dropped by about a quarter of a point to 103¼ bid, 103¾ offered after the company release "poor earnings" numbers, according to a trader.

For the third quarter, the company reported net sales of $275 million, down 6% versus net sales of $294 million in the third quarter of 2004. Adjusted EBITDA was a negative $6 million compared to adjusted EBITDA of $26 million in the third quarter of 2004. And, net loss per diluted share was $0.18 in the quarter compared with net loss per diluted share of $0.25 in the same period last year.

For the first nine months of 2005 net sales were $895 million, compared with net sales of $919 million in the first nine months of 2004. Adjusted EBITDA in the first nine months was $39.8 million, compared with adjusted EBITDA of $93.9 million in the first nine months of 2004. And, net loss in the nine-month period was $148 million, or $0.40 per diluted share, compared with a net loss in the first nine months of 2004 of $188.7 million, or $0.68 per diluted share.

Revlon is a New York-based cosmetics, skin care, fragrance and personal care products company.

Primedia stronger

Primedia's bank debt headed up to the 98¼ bid, 99 offered context from being wrapped around the 98 level on potential pay down talk, according to a trader.

In October, the company announced that it is thinking of separating its Consumer Guides Segment business from its Enthusiast Media and Education Segments business via a tax-free spinoff into two separate publicly traded companies.

"There's speculation on whether this would trigger a par pay down event under the credit agreement. It all depends on how you read the agreement. Some think it would; some think it wouldn't."

Primedia is a New York-based targeted media company.

American Retirement closes

American Retirement Corp. closed on its new $85 million five-year term loan, according to a company news release. Merrill Lynch Capital acted as the lead bank on the deal.

Proceeds were used to help fund the acquisition of eight senior living communities from an affiliate of Epoch Senior Living Inc. for a total purchase price of $138 million plus customary transaction expenses.

American Retirement is a Brentwood, Tenn., national senior living and health care services provider.

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