Valeant rises with amendment; Western Digital breaks; Blount, DYK Automotive changes surface

By Sara Rosenberg

New York, March 30 – Valeant Pharmaceuticals International Inc.’s term loans gained some ground in the secondary market on Wednesday as the company launched an amendment and waiver to its credit facility that would result in higher pricing.

In more happenings, Western Digital Corp. reworked its term loan tranche sizes, and then its U.S. term loan B freed up for trading late in the day, with levels quoted well above its original issue discount.

Also, Blount International Inc. made a number of revisions to its credit facility, including widening spreads and original issue discounts on its U.S. and euro term loans, and DYK Automotive/AAHC tightened the spread and issue price on its term loan while also adding a pricing step-down.

Furthermore, Precyse Acquisition Corp. and Pinnacle Entertainment Inc. released price talk on their loans with launch, Alvogen disclosed original issue discount guidance on its incremental loan, and Evoqua Water Technologies (EWT Holdings III Corp.) emerged with new deal plans.

Valeant trades up

Valeant’s term loans were stronger in trading on Wednesday as the company announced in a news release that it launched the process to obtain an amendment and waiver to its credit facility, according to a trader.

The term loans E and F were quoted at 94½ bid, 95 offered, up from 93¼ bid, 94 offered, and the term loans C and D were quoted at 95 bid, 95¾ offered, up from 93 5/8 bid, 94 5/8 offered, the trader said.

Under the proposal, the company is asking to extend the deadline for filing its form 10-K to May 31, to extend the deadline for filing its form 10-Q for the quarter ending March 31 to July 31 and to waive the cross-default to its indentures that arose when the 10-K was not filed on March 15.

Additionally, the company is asking to revise the interest coverage maintenance covenant and some financial definitions to provide additional cushion in its financial covenants.

Valeant lifting pricing

As part of the amendment, Valeant would increase pricing on all of its term loans by 50 basis points, a market source remarked.

The amendment would also restrict the company’s ability to make certain acquisitions and other investments and to pay dividends and other restricted payments until the financial statements are filed and specified leverage ratios are achieved, and require that substantially all net asset sale proceeds be used to prepay its term loans.

Lenders are being offered a 50-bps amendment fee.

Consents are due on April 6, the source added.

Valeant, a Laval, Quebec-based specialty pharmaceutical company, needs approval from lenders holding more than 50% of the loans in principal amount for the amendment and waiver to pass.

Western Digital restructures

Western Digital trimmed its U.S. seven-year covenant-light term loan B to $3.75 billion from $4.2 billion, and lifted its euro-denominated seven-year covenant-light term loan B to $1 billion-equivalent from $550 million-equivalent and its five-year term loan A to $4,125,000,000 from $3.75 billion, according to a market source.

The company’s now $9,875,000,000 credit facility also includes a $1 billion five-year revolver.

The U.S. term loan B is priced at Libor plus 550 bps with a 0.75% Libor floor and an original issue discount of 97, and the euro term loan B is priced at Euribor plus 525 bps with a 0.75% floor and a discount of 97.5. Both tranches have 101 soft call protection for one year.

Previously, the spread on the U.S. and euro term loan B’s flexed up from talk of Libor/Euribor plus 450 bps to 475 bps and the discounts widened from 98.5.

J.P. Morgan Securities LLC, Bank of America Merrill Lynch, Credit Suisse Securities (USA) LLC, RBC Capital Markets LLC, HSBC Securities (USA) Inc., MUFG and Mizuho are leading the credit facility.

Western Digital frees up

With final terms in place, Western Digital’s credit facility hit the secondary market, and the U.S. term loan B was quoted at 98¾ bid, 99¼ offered, a trader said.

Proceeds from the credit facility will be used with stock, $1,875,000,000 of senior secured notes and $3.35 billion of senior unsecured notes to fund the acquisition of SanDisk Corp. and refinance existing debt at both companies.

The secured notes were upsized from $1.5 billion, and the unsecured notes were cut from $4.1 billion.

SanDisk is being bought for $78.80 per share for a total equity value of about $17 billion. Assuming no closing cash shortfall, Western Digital will pay $67.50 in cash and 0.2387 of a share of Western Digital common stock per share of SanDisk common stock.

Closing is expected in the second quarter, subject to regulatory approval and other customary conditions.

Western Digital is an Irvine, Calif.-based developer and manufacturer of storage solutions for digital content. SanDisk is a Milpitas, Calif.-based provider of flash storage solutions.

Blount revises deal

Back in the primary market, Blount raised pricing on its $300 million seven-year first-lien term loan and $175 million equivalent euro-denominated seven-year first-lien term loan to Libor/Euribor plus 625 bps from Libor/Euribor plus 600 bps and moved the original issue discount to 97 from 98, while keeping the 1% floor and 101 soft call protection for one year intact, according to a market source.

Also, the free and clear basket under the incremental was reduced to $25 million from $50 million; the unlimited ratio basket was changed to up to total net leverage of 3.5 times from 4 times, with MFN for life; and the excess cash flow sweep was changed to 75%, stepping down to 50% at total net leverage of 3.25 times, 25% at total net leverage of 2.5 times and 0% at total net leverage of 1.75 times, from 50%, stepping to down to 25% at total net leverage of 3.25 times and 0% at total net leverage of 2.5 times.

In addition, the $15 million starter basket now outlines that the basket may not be used for restricted payments or junior debt payments.

Blount modifies covenant

Another change made to Blount’s loan was to the maximum total net leverage ratio. The ratio is still opening at 6 times, but it now steps down to 5.5 times on March 31, 2017, 5 times on March 31, 2018, 4.5 times on March 31, 2019 and 4 times on March 31, 2020, instead of stepping down to 5 times on Dec. 31, 2017, the source continued.

Furthermore, the definition of consolidated EBITDA was revised to permit add backs with respect to synergies and cost-savings realizable within 12 months and not to exceed 20% of consolidated EBITDA, from synergies and cost savings realizable within 18 months and not to exceed 25% of consolidated EBITDA.

Final commitments are due by 5 p.m. ET on Thursday, the source added.

The company’s $550 million senior secured credit facility (B1/B+) also includes a $75 million five-year revolver.

Barclays, KeyBanc Capital Markets Inc. and ING Capital are leading the debt.

Blount being acquired

Proceeds from Blount’s credit facility and $475 million in equity will be used to help fund the buyout of the company by American Securities LLC and P2 Capital Partners LLC for $10.00 in cash per share. The transaction is valued at about $855 million, including the assumption of debt.

Closing is expected in the first half of this year, subject to approvals by Blount’s shareholders and regulatory authorities, and the satisfaction or waiver of customary conditions. The buyout is not conditioned on financing.

Total leverage is 4.4 times and net total leverage is 4 times.

Blount is a Portland, Ore.-based manufacturer and marketer of replacement parts, equipment and accessories for consumers and professionals operating in three market segments: forestry, lawn and garden; farm, ranch and agriculture; and concrete cutting and finishing.

DYK flexes lower

DYK Automotive cut pricing on its $134 million term loan to Libor plus 475 bps from Libor plus 550 bps, added a step-down to Libor plus 450 bps at less than 3 times net secured leverage, and modified the original issue discount to 99 from talk of 98 to 98.5, a market source said.

As before, the term loan has a 1% Libor floor and 101 soft call protection for six months.

The company’s $164 million credit facility also includes a $30 million revolver.

Recommitments were due at 5 p.m. ET on Wednesday, the source added.

BNP Paribas Securities Corp. is leading the debt that will be used to help fund the buyout and merger of DYK and Automotive Aftermarket Holding Co. by The Sterling Group.

DYK Automotive is an automotive aftermarket distributor.

Precyse talk emerges

In more primary news, Precyse Acquisition held its bank meeting on Wednesday, launching its $460 million 6.5-year first-lien covenant-light term loan (B2/B+) with talk of Libor plus 575 bps to 600 bps with a 1% Libor floor, an original issue discount of 98 and 101 soft call protection for six months, a market source remarked.

Commitments are due at 5 p.m. ET on April 13, the source added.

The company’s $700 million credit facility also includes a $50 million five-year revolver (B2/B+) and a privately-placed $190 million seven-year second-lien term loan (Caa2/CCC+).

Barclays, Morgan Stanley Senior Funding Inc., J.P. Morgan Securities LLC and Jefferies Finance LLC are leading the deal that will be used to capitalize the merger of the MedAssets Revenue Cycle Management business and Precyse.

First-lien leverage is 4.3 times, and total leverage is 6 times.

Precyse, a Pamplona Capital Management portfolio company, is a provider of end-to-end revenue cycle services, technology and education solutions in the healthcare sector.

Pinnacle sets guidance

Pinnacle Entertainment came out with talk of Libor plus 375 bps with a 1% Libor floor, an original issue discount of 99 and 101 soft call protection for six months on its $350 million seven-year covenant-light term loan B (BB+) that launched with a bank meeting during the session, according to a market source.

Commitments are due on April 13.

The company is also planning a $400 million five-year revolver and a $185 million five-year term loan A.

J.P. Morgan Securities LLC, Bank of America Merrill Lynch, Goldman Sachs Bank USA, Fifth Third Bank, U.S. Bank, Credit Agricole Corporate and Investment Bank, Deutsche Bank Securities Inc. and Wells Fargo Securities LLC are leading the deal that will be used to refinance existing debt and for general corporate purposes.

The credit facility and $300 million of senior notes are being done in connection with the spinoff of the operating business and the real property of Belterra Park Gaming & Entertainment into a public company (Pinnacle) and the sale of the remaining real estate assets (PropCo) of Pinnacle to Gaming and Leisure Properties Inc.

Closing is expected on April 28, subject to customary conditions and regulatory approvals.

Pinnacle is a Las Vegas-based owner and operator of gaming entertainment properties.

Alvogen floats OID

Alvogen went out to lenders with original issue discount talk of 98.5 on its $55 million incremental first-lien term loan, a market source said.

As previously reported, pricing on the incremental loan is Libor plus 500 bps with a 1% Libor floor, in line with existing term loan pricing, and all of the first-lien term loan debt is getting 101 soft call protection for six months.

Commitments are due at 10 a.m. ET on Tuesday, the source added.

Jefferies Finance LLC is leading the deal that will be used for general corporate purposes and to potentially fund a portion of the acquisition of County Line Pharmaceuticals, a Wisconsin-based specialty generic pharmaceutical company.

Alvogen is a generic pharmaceutical company.

Evoqua readies loan

Evoqua set a lender call for 2 p.m. ET on Thursday to launch a non-fungible $185 million tack-on first-lien term loan due Jan. 15, 2021, according to a market source.

The term loan has a 1% Libor floor, the source said, adding that spread and original issue discount talk are not yet available.

Commitments are due on April 11.

Credit Suisse Securities (USA) LLC, Morgan Stanley Senior Funding Inc. and RBC Capital Markets are leading the loan that will be used to fund the acquisition of Neptune Benson, a manufacturer of high-quality water filtration and disinfection products for the recreational, industrial, and municipal water markets.

Closing is expected this spring, subject to customary regulatory approvals.

Evoqua is a Warrendale, Pa.-based provider of equipment and services for water treatment.

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