Asurion shelves deal; TriMas, Emergency Medical postponed; Wesco delays B loan launch

By Sara Rosenberg

New York, March 16 - In the primary market, deals continue to stumble and/or get pulled, with Asurion withdrawing plans for its multi-billion credit facility just one day after official talk was announced, TriMas Corp. postponing its conference call launch and Harron Communications LP being on unofficial hold.

Also, Wesco Aircraft Hardware Corp. opted not to launch its term loan B on Wednesday because of market conditions, but syndication on its pro rata did kick off as scheduled, and Belfor and Engineering Solutions & Products Inc. are getting ready to bring new deals to market.

Additionally, Emergency Medical Services Corp. has delayed the launch of its buyout financing credit facility, but unlike the other cases, the general market was not to blame for the move; rather, it's a function of the Securities and Exchange Commission deciding to review the company's proxy statement.

Moving to the secondary, Waste Industries USA Inc.'s term loan freed up for trading, with levels quoted above its original issue discount price, and MEG Energy Corp.'s term loan B broke as well.

Investor pushback continues

Over in the primary, there were a couple more deals hurt by unfavorable market conditions, including Asurion, which was pulled, TriMas, which was postponed, and Harron Communications, which is unofficially on hold.

"Deals getting pulled are repeat dividends or repricings from last year - nothing too surprising," one sellside source told Prospect News.

"The market was getting heavy even before the earthquake. I think the buyside was just getting exhausted from all the reprices and finally got cranky," he added.

A fund manager said that he, "of course." is happy to see the pulling of repricing/refinancing transactions "as our clients get higher coupons for longer at the very least."

"Longer term, where deals can get done will have implications for where future LBOs get priced. I think the market is cheap enough already to support that supply. I expect LBO activity to build up a head of steam," the fund manager continued.

Implications on demand

The fund manager went on to remark that the recently pulled deals are creating questions around the sources of demand in the loan market.

"People have been talking about the money pouring into retail loan funds, but that money still needs to be put to work. Seems to me the deal pulls imply a withdrawal of marginal buyers.

"Is that just high-yield funds who don't like the coupons, or is that hedge funds buying and flipping and now they think they can't? Probably not CLOs pulling back, because the offered coupons are still higher than where those deals were modeled," the fund manager remarked.

"I suspect, but can't prove, that too much of new deals [are] being allocated to flippers and other forms of non-buy-and-hold accounts so that dealers can make more trading income. The downside of that is that when the market goes risk-off, those marginal buyers are not there to satisfy the corporate finance needs of the borrowers."

Asurion cancels loan plans

As mentioned above, Asurion told lenders on Wednesday that it is removing its $4.64 billion covenant-light credit facility from the primary, according to a source.

The facility consisted of a $120 million five-year revolver (B+), a $3.5 billion seven-year first-lien term loan (B+) talked at Libor plus 375 basis points to 400 bps and a $1.02 billion eight-year second-lien term loan (B-) talked at Libor plus 775 bps. Both term loans had a 1.5% Libor floor and discount talk of 99 to 991/2. The first-lien term loan included 101 soft call protection for one year, and the second-lien loan was non-callable for one year, then at 103 in year two and 101 in year three.

Official talk on the facility just came out on Tuesday. Prior to that, there was unofficial guidance floating around at Libor plus 375 bps on the first-lien and Libor plus 750 bps to 775 bps on the second-lien, with both having a 1.25% to 1.5% Libor floor.

The deal was officially launched with a bank meeting last Thursday, but has been in a roadshow type marketing phase since then.

Asurion lead banks

Bank of America Merrill Lynch, Barclays, Credit Suisse, Morgan Stanley, Goldman Sachs and Deutsche Bank were acting as the lead banks on Asurion's credit facility that was going to be used to refinance existing debt.

In 2010, to fund a dividend, the Nashville, Tenn.-based provider of technology protection services got a $900 million incremental first-lien term loan priced at Libor plus 525 bps with a 1.5% Libor floor and an original issue discount of 96. There's call protection of 102 in year one and 101 in year two.

The company's original facility was obtained in 2007 to help fund its buyout by Madison Dearborn Partners, Providence Equity Partners and Welsh, Carson, Anderson & Stowe. At close, the deal consisted of a $100 million revolver priced at Libor plus 200 bps, a $1.755 billion first-lien term loan priced at Libor plus 300 bps and a $580 million second-lien PIK toggle term loan priced at Libor plus 650 bps cash pay.

TriMas delays launch

TriMas postponed the launch of its roughly $225 million term loan to an undetermined time from Wednesday morning, also as a result of market conditions, according to a buyside source.

J.P. Morgan is the lead bank on the deal that was going to be used to refinance existing term loan debt.

As of Dec. 31, the company had a $223.4 million extended term loan priced at Libor plus 400 basis points with a 2% Libor floor and a $25.6 million non-extended term loan priced at Libor plus 225 bps.

TriMas is a Bloomfield Hills, Mich.-based provider of engineered and applied products.

Harron on unofficial hold

Harron Communications went ahead with its bank meeting on Tuesday, but now the deal is "unofficially on hold" while the leads "ascertain where accounts may care," according to a market source.

A second source explained that it's an "opportunistic refinancing so the company is trying to figure out if it's worth proceeding at higher pricing."

Original talk on the deal prior to the actual launch had been Libor plus 300 bps on the $100 million revolver due 2016 and $200 million term loan A due 2016 and Libor plus 325 bps with a 1.25% Libor floor, an original issue discount of 99½ and 101 soft call protection for one year on the $300 million term loan B due 2017.

However, because of the turbulence in the primary market and ratings on the $600 million credit facility coming out lower than expected at B2/B, pricing would have to be increased in order to get investors on board, the second source added.

Harron assessing situation

Harron Communications' credit facility is still technically in market, but is currently in the price discovery phase. The company will then have to decide whether it wants to move forward or terminate its financing plans for now, in the hopes that it could come back later when the volatility calms down.

Proceeds from the deal would be used to refinance an all pro rata credit facility and redeem about $54 million in preferred equity.

SunTrust, Wells Fargo and Credit Agricole are the lead banks on the facility.

Harron Communications is a Frazer, Pa.-based provider of digital television, high speed internet, digital phone and business services.

Wesco launches pro rata only

Wesco Aircraft Hardware held a bank meeting on Wednesday, at which time the company decided to launch syndication of its pro rata bank debt, but hold off on launching its term loan B "given market conditions," according to a market source.

The $150 million five-year revolver and $200 million five-year term loan A were both presented to lenders with talk of Libor plus 300 bps with no Libor floor and an offer price of 99, the source said.

Timing on the $415 million six-year term loan B is labeled as to be determined, since it will depend on general market conditions. "Pro rata process moves along slower anyway, so things may pick back up as its winding down," the source added.

Bank of America Merrill Lynch and Barclays are the joint lead arrangers on the deal and bookrunners, with J.P. Morgan, Morgan Stanley, RBC and Sumitomo.

Wesco, a Valencia, Calif.-based integrated inventory management services provider and distributor of hardware and other components to the aerospace industry, will use proceeds to refinance existing debt.

Belfor plans launch

Belfor is scheduled to launch a $460 million credit facility on Thursday that will be used to refinance existing debt, according to a market source.

J.P. Morgan is the lead bank on the deal, which consists of a $125 million revolver, a $75 million term loan A and a $260 million term loan B, the source said.

Market chatter is that the term loan B is being guided at Libor plus 325 bps to 350 bps, the source added.

Belfor is a disaster recovery and property restoration company.

Engineering coming soon

Engineering Solutions & Products is anticipated to launch a new $140 million credit facility later this month that consists of a $20 million revolver and a $120 million term loan, according to a source.

Early guidance on the revolver is Libor plus 450 bps and on the term loan is Libor plus 500 bps, the source said.

Bank of America Merrill Lynch is the lead bank on the deal that will be used to help fund the buyout of the company by Berkshire Partners.

Engineering Solutions & Products is an Eatontown, N.J.-based solution provider for engineering, technical and consulting services in response to Department of Defense requirements.

Emergency Medical postponed

Emergency Medical Services has canceled the bank meeting for its $1.725 billion credit facility that was set to take place on March 17 at 10 a.m. ET at the W Hotel in New York and is now planning to bring the deal to market during the week of April 4, according to market sources.

The sources said that the SEC is reviewing the company's proxy, which is why the bank meeting has been pushed off. Market conditions had nothing to do with the decision.

Deutsche Bank, Barclays, Bank of America Merrill Lynch, Morgan Stanley, RBC, UBS, Natixis and Citigroup are the lead banks on the deal.

The credit facility consists of a $350 million ABL revolver and a $1.375 billion term loan, with price talk not yet available.

Emergency Medical to be bought

Proceeds from Emergency Medical Services' credit facility will be used to help fund the buyout of the company by Clayton, Dubilier & Rice LLC for $64 in cash per share of common stock and exchangeable unit. The transaction is valued at $3.2 billion.

Other funds for the transaction will come from $950 million of senior unsecured notes that are backed by a bridge loan commitment and up to $900 million of equity.

The notes are now expected to come to market in April, instead of being March business because of the proxy review, sources added.

Closing on the acquisition is expected in the second quarter, subject to customary conditions, including regulatory approvals and approval by the company's stockholders. Onex Corp., the holders of the company's LP exchangeable units, have sufficient voting power to approve the buyout and have agreed to vote in favor of adoption of the agreement.

Emergency Medical is a Greenwood Village, Colo.-based provider of health care transportation services and outsourced physician services to health care facilities.

Waste Industries breaks

Over in the secondary, Waste Industries' credit facility started trading, with the $425 million term loan quoted by one trader at par bid, par ¼ offered and by a second trader at par bid, par 3/8 offered.

Pricing on the term loan is Libor plus 350 bps with a 1.25% Libor floor, and it was sold at an original issue discount of 993/4. There is 101 soft call protection for one year.

During syndication, the term loan was downsized from $475 million as the company's revolver, which is also priced at Libor plus 350 bps, was upsized to $325 million from $225 million. The Libor floor on the term loan was cut from 1.5% and the offer price firmed at the midpoint of the 99½ to par talk.

Bank of America Merrill Lynch, Macquarie Capital and Wells Fargo are the lead banks on the $750 million credit facility (B1/B+) that is being used to refinance existing debt.

Waste Industries is a Raleigh, N.C.-based solid waste services company.

MEG trades atop par

MEG Energy's $1 billion term loan B also freed up on Wednesday, with levels quoted at par 1/8 bid, par 3/8 offered, according to a trader.

Pricing on the Calgary, Alta.-based oil sands development company's loan is Libor plus 300 bps with a 1% Libor floor, and it was sold at par. There is 101 soft call protection for one year.

The company's $1.5 billion credit facility (Ba3/BBB-) also includes a $500 million revolver.

Barclays, Credit Suisse, BMO Capital Markets and Morgan Stanley are the joint bookrunners on the deal that will be used to help refinance the company's existing revolver, term loan B and term loan D and for general corporate purposes.

Pricing on the existing $200 million revolver due Jan. 31, 2013 is Libor plus 400 bps with a 75 bps unused fee, pricing on the $41.5 million term loan B due April 3, 2013 is Libor plus 200 bps and pricing on the $957.9 million term loan D due April 3, 2016 is Libor plus 400 bps with a 2% Libor floor.

Jo-Ann softens

Also in trading, Jo-Ann Stores Inc.'s term loan headed lower from its recent breaking levels, according to a trader.

The term loan was quoted at 98½ bid, 99¼ offered, down from the 99 1/8 bid, 99 5/8 offered level that was seen when it freed up for trading on Tuesday, the trader said.

Jo-Ann Stores is a Hudson, Ohio-based specialty retailer of fabrics and crafts.

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