Cengage rises as bond exchange offer wraps; primary activity set to pick up in coming week

By Sara Rosenberg

New York, July 6 - Cengage Learning Acquisitions Inc.'s extended and non-extended term loans were stronger in trading on Friday on the back of news that the company completed an exchange offer for some senior notes.

Meanwhile on the primary side, after wrapping a fairly quiet holiday week, investors are looking ahead to the week of July 9, which is shaping up to be fairly busy, with deals like Hologic Inc., Panolam Industries International Inc., Paradigm Holdco Sarl, CDC Software, Liberty Cablevision of Puerto Rico LLC, Party City Holdings Inc. and Connolly Inc. set to hold bank meetings, and WideOpenWest Finance LLC (WOW!) is expected to reemerge.

Cengage gains ground

Cengage Learning's term loans headed higher in the secondary market on Friday, as the company announced late in the previous session that it closed on a notes exchange offer, according to a trader.

The extended term loan was quoted at 86¾ bid, 87¾ offered, up from 86 bid, 87 offered, and the non-extended term loan was quoted at 93½ bid, 94½ offered, up from 92¾ bid, 93¾ offered, the trader said.

Under the exchange offer, the company exchanged about $710 million of its 10½% senior notes due 2015 for about $710 million of newly issued 12% senior secured second-lien notes due 2019.

The company also repurchased roughly $29 million of the 2015 notes from holders, leaving around $477 million of the debt outstanding after giving effect to the exchange.

Cengage management changes

In addition, Cengage disclosed late Thursday that its chief executive officer, Ronald G. Dunn, is retiring and assuming the role of executive chairman, and its chairman, David Shaffer, is retiring as well.

The company is in the advanced stages of a search to identify Dunn's successor.

Dunn's retirement will be effective upon his successor joining the company, and Shaffer's retirement will be effective on Sept. 30.

Cengage is a Stamford, Conn.-based provider of teaching, learning and research services for the academic, professional and library markets.

Hologic bringing B loan

Switching to the new deal front, one of the first deal's to kick off the week will be Hologic, as the company is set to hold a bank meeting on Monday to launch its proposed $1.75 billion seven-year term loan B that was downsized from an initially anticipated amount of $2 billion.

The $250 million term B reduction is being made up for by an increase to the company's proposed senior notes offering to $750 million from $500 million.

Hologic's $3.05 billion senior secured credit facility (Ba2/BBB-) also provides for a $300 million undrawn five-year revolver and $1 billion five-year term loan A that were already launched to investors in May.

Goldman Sachs & Co., J.P. Morgan Securities LLC and Citigroup Global Markets Inc. are the lead banks on the deal.

Hologic buying Gen-Probe

Proceeds from Hologic's credit facility, bonds and $826 million of cash and marketable securities on hand will fund the acquisition of Gen-Probe Inc. for $82.75 per share in cash, or a total enterprise value of about $3.7 billion.

Official price talk on the credit facility has not yet emerged, but based on earlier filings with the Securities and Exchange Commission, pricing on the revolver and the term loan A is expected to be Libor plus 275 basis points, Libor plus 287.5 bps or Libor plus 300 bps depending on ratings at close. The revolver unused fee is expected to be 50 bps with a step-down to 37.5 bps based on leverage.

The filings also said that pricing on the term loan B is expected to be Libor plus 350 bps with a 1% Libor floor, and there is 101 soft call protection for one year.

Hologic leverage

Hologic's pro forma net leverage will be 5.6 times, net leverage will be 5.1 times and total secured leverage will be 3.1 times.

Closing on the transaction is expected in early August, subject to approval of Gen-Probe's shareholders, expiration of Hart-Scott-Rodino Antitrust Improvements Act of 1976, which has been obtained, and necessary foreign clearances.

Hologic is a Bedford, Mass.-based developer, manufacturer and supplier of diagnostics products, medical imaging systems and surgical products for the health care needs of women. Gen-Probe is a San Diego-based developer, manufacturer and marketer of molecular diagnostic products and services that are used primarily to diagnose human diseases, screen donated human blood and ensure transplant compatibility.

Panolam deal surfaces

Panolam Industries announced that it will launch with a bank meeting on Tuesday a $147 million five-year credit facility that will be used to refinance existing debt, according to a market source.

GE Capital Markets is the left lead on the deal.

The facility consists of a $15 million revolver and a $132 million term loan, the source said, adding that price talk should come out early in the week of July 9.

Panolam is a Shelton, Conn.-based producer of decorative laminates that is majority owned by Apollo Capital Management.

Paradigm coming soon

Paradigm Holdco is another early week deal, with the company scheduled to host a bank meeting on Tuesday morning to launch a $460 million credit facility that is being led by UBS Securities LLC and RBC Capital Markets LLC.

The facility consists of a $40 million five-year revolver, a $290 million seven-year first-lien term loan and a $130 million eight-year second-lien term loan, sources previously said.

Proceeds will be used to help fund the purchase of the company by Apax Partners and JMI Equity from Fox Paine & Co. for about $1 billion in cash.

Paradigm is a software vendor focused on the oil and gas exploration and production space with a significant presence across Europe, the Americas, the Middle East, Africa, China and Australasia.

CDC Tuesday business

Another deal slated for a Tuesday launch is CDC Software's $260 million credit facility that is comprised of a $10 million revolver, a $100 million term loan A and a $150 million term loan B.

BMO Capital Markets Corp. and Golub Capital are leading the deal that will be used to help fund the acquisition of Consona Corp. by Vista Equity Partners, CDC's current sponsor, and the merger of Consona with CDC.

CDC Software is an Atlanta-based enterprise software provider of on-premise and cloud technologies. Consona is an Indianapolis-based provider of customer relationship management and enterprise resource planning software and services.

Liberty readies deal

Liberty Global Inc.'s subsidiary Liberty Cablevision of Puerto Rico is holding a bank meeting on Tuesday as well, with Scotia Capital (USA) Inc. the left lead on the $185 million five-year credit facility (B+), sources told Prospect News.

The facility consists of a $10 million revolver and a $175 million term loan talked at Libor plus 450 bps with a 1.5% Libor floor and an original issue discount that is still to be determined.

Proceeds will fund the company's merger with San Juan Cable LLC (OneLink Communications). LGI Broadband Operations Inc., a subsidiary of Liberty Global, and Searchlight Capital Partners LP are buying San Juan Cable in a transaction valued at about $585 million before transaction costs.

Closing is expected in the fourth quarter, subject to regulatory approval, and upon completion, the combined business will be 60%-owned by Liberty Global and 40%-owned by Searchlight.

Liberty Global is an Englewood, Colo.-based cable company.

Party City on deck

Party City's $1.45 billion credit facility will be launching with a Tuesday meeting too, and as already reported, the transaction has seen some early interest from potential lenders and the $700 million bridge loan backing the bond offering is fully syndicated.

The credit facility consists of a $400 million ABL revolver and a $1.05 billion term loan, and although price talk on the term loan is not yet out, sources are expecting it to be in the same vicinity as Savers Inc.'s term loan B since it is fairly comparable.

Savers, a Bellevue, Wash.-based thrift store chain, successfully syndicated its $655 million seven-year term loan B last month at pricing of Libor plus 500 bps with a 1.25% Libor floor and an original issue discount of 99.

Party City lead banks

Deutsche Bank Securities Inc., Bank of America Merrill Lynch, Goldman Sachs & Co., Morgan Stanley Senior Funding Inc. and Barclays Capital Inc. are leading Party City's credit facility that will, along with $700 million of notes, fund its buyout by Thomas H. Lee Partners LP in a transaction valued at $2.69 billion.

Advent International Corp., Berkshire Partners LLC, Weston Presidio and management, which currently own Party City, will continue to hold significant minority stakes following the recapitalization.

Party City is a Rockaway, N.J.-based designer, manufacturer and distributor of party goods.

Connolly set for Thursday

Connolly's $400 million credit facility is also on the calendar, with a bank meeting scheduled for Thursday to launch the transaction that will help fund the company's buyout by Advent International.

RBC Capital Markets LLC and SunTrust Robinson Humphrey Inc. are leading the credit facility that consists of a $30 million revolver, a $240 million first-lien term loan and a $130 million second-lien term loan.

Leverage through the first-lien is 3.97 times and through the second-lien is 6.13 times.

Connolly, an Atlanta-based provider of technology-enabled recovery audit services, expects its buyout to be completed this month.

WideOpenWest revisions

Also in the week of July 9, investors are anticipating WideOpenWest to come out with modifications to and return with its debt financing, a move that market players were told about in late-June.

On June 13, the company held a bank meeting to launch a $2.12 billion credit facility (B1/B) that consists of a $200 million five-year revolver and a $1.92 billion seven-year first-lien term loan B.

Shortly before launch, price talk on the term loan B came out at Libor plus 500 bps with a 1.25% Libor floor and an original issue discount of 981/2, and the debt included 101 soft call protection for one year.

Credit Suisse Securities (USA) LLC, Morgan Stanley Senior Funding Inc., RBC Capital Markets, SunTrust Robinson Humphrey Inc. and Bank of Tokyo-Mitsubishi-UFJ Ltd. are the lead banks on the deal.

WideOpenWest acquisition

Proceeds from WideOpenWest's credit facility will be used to help fund the acquisition of Knology Inc. for $19.75 per share in cash. The total transaction value is around $1.5 billion.

Based on the original structure, other funds for the purchase are expected to come from $1.02 billion of senior unsecured notes and around $200 million of equity.

Closing is subject to stockholder approval, regulatory approvals and customary conditions.

WideOpenWest, an Avista Capital Partners portfolio company, is a Denver-based provider of residential and commercial high-speed internet, cable television and telephone services. Knology is a West Point, Ga.-based provider of interactive communications and entertainment services.

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