West, Jarden extended loans trading; Michaels softens; Warner Chilcott outlines structure

By Sara Rosenberg

New York, Aug. 25 - West Corp. and Jarden Corp. saw their recently extended term loans hit the secondary market during Tuesday's market hours, and both term loans were seen in the upper 90 context.

Also in trading, Michaels Stores Inc.'s term loan B moved lower in light trading as earnings were released.

In other news, Warner Chilcott plc released details on its proposed loan financing for the acquisition of Procter & Gamble Co.'s pharmaceuticals business, including expected tranche sizes and pricing.

West extended loan breaks

West's $1 billion term loan B-4 freed up for trading, with levels on the debt quoted at 97¼ bid, 98¼ offered, according to traders.

The term loan B-4 is due on July 15, 2016, is priced at Libor plus 387.5 basis points and carries 101 soft call protection for two years.

The B-4 was created in order to extend the maturity on some of the company's existing term loan borrowings from Oct. 24, 2013.

Pricing on the non-extended term loan debt remained at Libor plus 237.5 bps.

The company's non-extended term loan B-2 was quoted at 95 bid, 96 offered on Tuesday and the term loan B-3 was quoted at par ¾ bid, traders added.

West B-4 saw revisions

During the amend-and-extend process, West's term loan B-4 was increased from an original size of $700 million, pricing was lifted from initial talk of Libor plus 362.5 bps and the two years of call protection were added.

Also added to the tranche was a springing maturity at 91 days prior to the senior notes' maturity in 2014 subject to a 2.8 times net secured leverage test.

The company's amendment, which was approved by lenders last week, also allows the company to agree with individual lenders to make additional extensions of their term loans or extend or refinance their revolving credit commitments and to issue new secured notes.

Deutsche Bank, Wells Fargo and Bank of America acted as the lead banks on the amendment.

West is an Omaha, Neb.-based provider of outsourced communication services.

Jarden frees to trade

Another extended term loan that made its way into the secondary market was Jarden's $600 million B-4 tranche, with levels on the paper seen at 99¾ bid, no offers, according to traders.

The term loan B-4 is due on Jan. 24, 2015 and priced at Libor plus 325 bps with no Libor floor.

The company's non-extended term loan B debt is due in 2012. There is a B-1 that is priced at Libor plus 175 bps, a term loan B-2 that is priced at Libor plus 175 bps and a term loan B-3 that is priced at Libor plus 250 bps.

On Tuesday, the term loan B-1 was quoted at 96¾ bid, 97½ offered in trading, the term loan B-2 was also quoted at 96¾ bid, 97½ offered, and the term loan B-3 was quoted at 98¾ bid, 99½ offered, traders remarked.

During the amendment process, the company had expressed to lenders that it was willing to upsize the term loan B-4 to $750 million from the originally proposed size of $600 million as long as half of that amount came from term loan B-3 rollover and the other half came from term loan B-1 and B-2 rollover. The upsizing, however, never ended up taking place.

More Jarden amendment details

In addition to creating the new term loan B-4, Jarden's amendment, which was also approved last week, allows for the sale of secured notes that would be used to pay down term loan B borrowings at par.

Other amendment terms include allowing Deutsche Bank, JPMorgan and Barclays to be issuers of letter of credit, and increasing the permitted receivables basket to $400 million from $250 million and the general debt basket to $150 million from $75 million.

Deutsche Bank, Barclays and JPMorgan acted as the joint bookrunners on the amendment and extension.

Lenders were paid an amendment fee of 15 bps. This fee was increased from 5 bps during the amendment process.

Jarden is a Rye, N.Y.-based consumer products company.

Michaels Stores weakens

Michaels Stores' term loan B headed downwards during market hours as the company came out with second-quarter results, according to a trader.

The term loan B was quoted at 88¼ bid, 89¼ offered, down from 89 bid on Monday, the trader said.

For the quarter, the company had net income of 2 million, compared to a $30 million loss for the same period last year.

Net sales for the quarter were $807 million, a 1.4% increase over the prior year's net sales of $796 million.

And, adjusted EBITDA for the quarter increased 16.4% to $85 million from $73 million in the second quarter of 2008.

As of Aug. 1, the company's cash balance was $36 million. Second-quarter debt levels declined $70 million to $3.964 billion, compared to$4.034 billion as of the end last year's second quarter, availability under the revolver was $526 million and a $5.9 million amortization payment was made on the term loan.

Michaels Stores is an Irving, Texas-based specialty retailer of arts, crafts, framing, floral, wall décor and seasonal merchandise for the hobbyist and do-it-yourself home decorator.

Warner Chilcott loan plans

Over on the new deal front, Warner Chilcott revealed that it anticipates coming to market with a $2.75 billion senior secured credit facility, and it outlined tranching and expected pricing on the deal, according to an 8-K filed with the Securities and Exchange Commission.

Under the commitment letter that the company has received, the credit facility consists of a $250 million five-year revolver, a $1 billion five-year term loan A and a $1.5 billion 51/2-year term loan B.

The revolver and the term loan A are expected to be priced at Libor plus 350 bps and the term loan B is expected to be priced at Libor plus375 bps, and all tranches will have a 2.5% Libor floor.

The term loan A and the term loan B will be offered to lenders at an original issue discount of 98.

Up to $350 million of the term loan A and/or the term loan B can be available as a 180-day delayed-draw loan.

The commitment fee on the revolver is 75 bps and the commitment fee on the delayed-draw term loan is half of the drawn spread.

Waner Chilcott led by six

Warner Chilcott's credit facility is being led by joint bookrunners Bank of America, Credit Suisse, Barclays, Citigroup, JPMorgan and Morgan Stanley. The co-lead arrangers are Bank of America and Credit Suisse, and Credit Suisse is the administrative agent.

The banks have committed to provide 16 2/3% of the credit facility.

Financial covenants include a maximum leverage ratio opening at 4.25 times and decreasing until it reaches 2.5 times after Sept. 30, 2013, and an interest coverage ratio that opens at 2.0 times and increases until it reaches 3.0 times after Sept. 30, 2013.

Proceeds will be used to help finance the acquisition of Procter & Gamble's pharmaceuticals business and to refinance Warner Chilcott's existing credit facility. The delayed-draw loan, if obtained, can be used to acquire all of Sanofi-Aventis U.S. LLC's interest if necessary.

Other financing for the transaction will come from the sale of $1.4 billion of senior unsecured notes, which is backed by a commitment for a one-year bridge loan.

The transaction is expected to close in the fourth quarter, subject to regulatory approvals, the receipt of proceeds of the financing, the delivery of audited financial statements for the pharmaceuticals business and other customary conditions.

Warner Chilcott is a Rockaway, N.J.-based specialty pharmaceutical company.

Mediacom completes loan

Mediacom LLC completed on Tuesday its $300 million incremental term loan D (Ba3/BB-) due March 31, 2017. Funding, however, is not scheduled to take place until Sept. 24, according to a news release.

The term loan D is priced at Libor plus 350 bps with a 2% Libor floor and was sold at an original issue discount of 981/2.

During syndication, the loan was upsized from $200 million and the discount tightened from initial guidance of in the 98 area.

JPMorgan and Bank of America Merrill Lynch acted as the lead banks on the deal that will be used, along with $350 million of senior notes, to fund tenders for 9½% senior notes due 2013 and 7 7/8% senior notes due 2011.

The tender offers are scheduled to expire on Sept. 8

Mediacom is a Middletown, N.Y.-based cable company.

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