Michael Foods sets spread, breaks; Citgo, Willbros tweak deals; Radio One pricing surfaces

By Sara Rosenberg

New York, June 21 - Michael Foods Inc. finalized pricing on its well-received term loan at the tight end of talk and then freed the deal up for trading on Monday, with levels seen above the tranche's original issue discount price.

In other news, Citgo Petroleum Corp. revised sizes on its term loans once again now that the company's bonds have successfully priced, and Willbros Group Inc. announced new pricing guidance on its term loan B.

Also, Radio One Inc. revealed official price talk on its term loan as the deal was presented to investors, and Ocwen Loan Servicing LLC and SonicWALL Inc. firmed up timing on the launches of their credit facilities, scheduling bank meetings for later this week.

Michael Foods firms spread

Michael Foods set pricing on its $790 million term loan at Libor plus 450 basis points, the low end of the initial Libor plus 450 bps to 475 bps guidance, according to a market source.

As before, the loan includes a 1.75% Libor floor and 101 soft call protection for one year, and was sold to investors at an original issue discount of 98.

Books on the deal were closed at noon ET on Friday after the deadline was accelerated from Monday because of strong demand.

The company's $865 million deal (B1/BB-) also includes a $75 million revolver.

Bank of America, Goldman Sachs and Barclays are the lead banks on the credit facility, with Bank of America the left lead.

Michael Foods frees to trade

After finalizing pricing, Michael Foods saw its credit facility break for trading, with the term loan quoted at 99¾ bid, par ¼ offered, according to traders.

Proceeds from the credit facility will be used to help fund its buyout by GS Capital Partners from Thomas H. Lee Partners LP in a transaction valued at $1.7 billion.

Other funding for the transaction is expected to come from $430 million of eight-year senior unsecured notes.

The roadshow for the notes kicked off last Thursday, and pricing is expected to take place on Tuesday. Price talk is a yield of 9¾% to 10%.

Michael Foods is a Minnetonka, Minn.-based producer and distributor of food products.

Citgo revises structure

Citgo came out with another group of changes to the structure of its credit facility, this time downsizing the five-year term loan B and upsizing the seven-year term loan C, according to a market source.

The term loan B is now sized at $350 million, down from $600 million, with pricing unchanged at Libor plus 600 bps with a 2% Libor floor and an original issue discount of 98, the source said. There is still call protection of 102 in years one and two, and 101 in year three.

And, the term loan C is now sized at $700 million, up from $650 million, with pricing unchanged at Libor plus 700 bps with a 2% Libor floor and an original issue discount of 98, the source continued. This tranche is non-callable for two years, then at 102 in year three and 101 in year four.

As for the company's revolver, that is still sized at $750 million and priced at Libor plus 450 bps with a 62.5 bps unused fee. The spread is determined by a ratings grid. The tranche was offered at upfront fees ranging from 100 bps to 150 bps based on order size.

Citgo changes follow notes pricing

Citgo decided on the new tranching for its credit facility on Monday on the back of pricing $300 million of 11½% seven-year senior secured first-lien notes at 98.822 to yield 11¾% on Friday, the source remarked.

When the credit facility was first launched in May, the company was looking to get just a $300 million five-year term loan that was being talked at Libor plus 350 bps with a 1.75% Libor floor and an original issue discount of 981/2, and a $700 million revolver that was talked at Libor plus 325 bps.

As part of the original plans, Citgo was looking to sell $1.5 billion of notes. A roadshow for the notes began in mid-May, but because of market conditions, the deal struggled, resulting in a good portion of the funds being moved into the loan market.

The first changes made to the company's credit facility included upsizing the term loan B to the $500 million to $550 million area, adding a $500 million term loan C, increasing the revolver to $750 million, and flexing pricing higher on everything. The B loan was then upsized to $600 million and the C loan to $650 million before settling in at their current sizes.

Citgo refinancing debt

Citgo's now $1.05 billion in term loans, along with the notes, a revolver draw and cash on hand, will provide the company with enough funds to refinance its existing revolver, term loans and variable industrial revenues bonds and maintain sufficient liquidity, the source remarked.

As a condition of the refinancing, the company was required to raise at least $1 billion in new debt.

BNP Paribas, RBS and UBS are the lead banks on the $1.8 billion senior secured credit facility (Ba2/BB+/BB+), with BNP the left lead.

Allocations are expected to go out on Wednesday with closing targeted for Thursday.

Citgo is a Houston-based refiner and marketer of transportation fuels, lubricants, petrochemicals and other industrial products.

Willbros modifies term loan talk

Willbros Group released revised price talk on its $300 million four-year term loan B after spending some time recently talking to accounts to figure out the right spread, Libor floor and original discount mix, according to a market source.

The term loan B is now being talked at Libor plus 750 bps with a 2% Libor floor and an original issue discount in the 97 to 98 area, the source said.

When the deal was first launched in early April, the B loan was sized at $300 million and was talked at Libor plus 450 bps to 500 bps with a 2% Libor floor and an original issue discount of 98 to 981/2. Also, pricing was able to step down by 50 bps after an interim period.

The loan, however, was not getting done at those terms, so the company decided to leave price talk unchanged but downsize the term loan B to $50 million and approach the high-yield market with a $250 million six-year senior secured second-lien notes offering that was talked in the 12% area.

The notes were then discarded as a result of weakness in the high-yield market.

Willbros getting revolver, too

Willbros' $475 million senior credit facility also includes a $175 million three-year revolver, which has been fully committed for a while now.

At launch, the revolver was being talked at Libor plus 425 bps, with a step-down to Libor plus 375 bps after an interim period. Upfront fees on the revolver were being offered anywhere from 112.5 bps to 137.5 bps based on commitment size.

Price talk on the revolver was left unchanged, the source remarked.

Ratings on the facility when it was initially sized at $475 million were B2/BB-, and when the deal was downsized and the bonds were introduced, the ratings were revised to Ba3/BB+.

Crédit Agricole Corporate and Investment Bank and UBS Securities are the joint bookrunners on the company's term loan B, and they are asking for commitments by the end of the week. Crédit Agricole is the bookrunner on the revolver.

Willbros buying InfrastruX

Proceeds from Willbros' credit facility will be used to help fund the acquisition of InfrastruX Group Inc., a Seattle, Wash.-based provider of electric power and natural gas transmission and distribution infrastructure services.

Wilbros will be paying stockholders of InfrastruX, cash of $360 million and 7.9 million of new Willbros shares.

In addition, InfrastruX stockholders will be eligible for contingent earn-out payments of up to $125 million.

The company is targeting to close on the acquisition by the end of this month.

Willbros is a Houston-based independent contractor for the oil, gas, power, refining and petrochemical industries.

Radio One announces talk

Radio One held a bank meeting on Monday afternoon to kick off syndication on its proposed $350 million term loan B, and in connection with the launch, price talk was disclosed, according to sources.

The term loan B was presented to lenders with talk of Libor plus 525 bps with a 1.5% Libor floor and an original issue discount of 99, sources said.

By comparison, a recent 8-K filed with the Securities and Exchange Commission had the term loan B expected at Libor plus 500 bps with a 2% Libor floor and an original issue discount of 99.

The company's $400 million senior secured credit facility (Ba3/BB-) also includes a $50 million revolver, which, according to the 8-K, will be priced 50 bps below the term loan.

Radio One led by Deutsche

Deutsche Bank is the lead bank on the Radio One's credit facility, and it has committed to provide the revolver and to use commercially reasonable efforts to syndicate the B loan.

Financial covenants include a minimum interest coverage ratio and a maximum first-lien net leverage ratio.

Proceeds will be used to refinance the company's existing credit facility.

Radio One is a Lanham, Md.-based diversified media company that primarily targets African-American and urban consumers.

Ocwen timing emerges

A firm launch date surfaced for Ocwen Loan Servicing's $350 million senior secured term loan as a bank meeting has been scheduled for Wednesday afternoon to launch the deal to investors, according to a market source.

Previously, the deal was just labeled as June business, with the expectation that it would be somewhere around the mid-month timeframe.

Barclays is the lead bank on the deal and actually provided the company with a commitment for an up to $400 million term loan.

Proceeds will be used to help fund the acquisition of Barclays Bank plc's HomEq Servicing, a U.S. mortgage servicing business, for $1.3 billion in cash.

Ocwen getting seller financing

As part of the purchase agreement, Barclays has agreed to provide Ocwen Loan Servicing with seller financing in the form of a $140 million bridge loan, which is expected to be replaced by the term loan.

In addition, Barclays also said that it will provide a $905 million servicer advance facility.

Closing on the acquisition is expected to take place in the third quarter, subject to customary conditions, including competition clearance.

Ocwen Loan Servicing is a subsidiary of Ocwen Financial Corp., a West Palm Beach, Fla.-based provider of residential and commercial loan servicing, special servicing and asset management services.

SonicWALL sets launch

SonicWALL nailed down timing on the launch of its proposed $260 million credit facility, scheduling a bank meeting for Thursday - as was expected, according to a market source.

The facility consists of a $155 million first-lien term loan and a $105 million second-lien term loan.

Early guidance on the first-lien term loan is Libor plus 500 bps with a 1.75% Libor floor and an original issue discount of 981/2, and on the second-lien, it is Libor plus 900 bps with a 1.75% Libor floor and a discount of 98.

Credit Suisse is the lead bank on the deal.

SonicWALL funding buyout

Proceeds from SonicWALL's credit facility will be used to help fund the acquistion of the company by Thoma Bravo LLC and Ontario Teachers' Pension Plan for $11.50 per share in cash. The transaction is valued at about $717 million.

Other funding will come from $280 million of equity and cash on hand.

Closing is expected to take place in the company's fiscal quarter ending Sept. 30 or early in the fiscal quarter ending Dec. 31, subject to regulatory and shareholder approvals.

SonicWALL is a San Jose, Calif.-based provider of IT security and data backup and recovery services.

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