Pilot Travel narrows down OID; TowerCo focuses on tight end; TASC sets talk; RehabCare breaks

By Sara Rosenberg

New York, Nov. 19 - Pilot Travel Centers LLC is expecting the original issue discount on its term loan to end up at the tight end of talk, and TowerCo accelerated the commitment deadline on its credit facility and is focusing on the low end of price talk as a result of the deal being met with strong investor interest.

Also on the primary front, TASC Inc. and Fairway Market LLC released price talk on their new deals, and the Princeton Review Inc. is anticipated to wrap syndication of its credit facility at the end of this week in line with initial terms.

Over in the secondary market, RehabCare Group Inc. freed up for trading, TD Ameritrade Holding Corp. and Conseco Inc. were better on paydown news and Sally Beauty Holdings Inc. was up after earnings were announced.

Pilot Travel expected OID emerges

Pilot Travel is anticipating that the original issue discount on its $800 million term loan B will firm at 99, the low end of the initial 98½ to 99 guidance, according to a market source.

Price talk on the term loan B is Libor plus 350 basis points with a 2% Libor floor and has been since launch.

Books on the deal close on Friday.

Pilot Travel's $2.15 billion senior secured credit facility (Ba2/BBB-) also includes a $500 million revolver and a $500 million term A, both talked at Libor plus 325 bps with a 2% Libor floor, and a $350 million term loan C that is not being syndicated.

The revolver and the term loan A are being sold pro rata and are being offered with upfront fees that are based on commitment size.

Bank of America and Wells Fargo are the lead banks on the credit facility that will be used to fund the acquisition of Flying J. Inc.'s travel plaza business.

Pilot Travel Centers is a Knoxville, Tenn.-based operator of travel centers.

TowerCo eyes low side of talk

TowerCo is looking at pricing its $200 million five-year term loan B at the tight end of the original price since the "deal is over the top" in terms of commitments, according to a market source.

At launch, the term loan was presented with talk of Libor plus 400 bps to 425 bps with a 2% Libor floor and an original issue discount of 98 to 99 - meaning the focus now is Libor plus 400 bps with a discount of 99.

In addition, because of the strong demand, the books are now expected to close on Friday, two days ahead of the original schedule, the source said.

The company's $240 million senior secured credit facility (Ba3/BB) also includes a $40 million three-year revolver.

Morgan Stanley and Jefferies are the lead banks on the deal that will be used to pay a dividend to sponsors.

TowerCo is a Cary, N.C.-based developer, owner and leaser of communication towers.

TASC price talk surfaces

TASC came out with price talk on its proposed $690 million senior secured credit facility as the deal is gearing up to launch with a bank meeting in New York on Friday morning, according to a market source.

The $100 million revolver and the $200 million term loan A are being talked at Libor plus 375 bps, and the $390 million term loan B is being talked at Libor plus 400 bps, with all tranches carrying a 2% Libor floor, the source said.

Original issued discount on the revolver is 98, and original issue discount on the term loan A and the term loan B is 981/2, the source added.

Initially it was thought that the company would only get a total of $580 million of term loan debt, but the amount was recently upsized by $10 million.

TASC lead banks

Barclays Capital, Deutsche Bank Securities and RBC Capital Markets are the lead banks on the TASC deal, with Barclays the left lead. In addition, CPPIB Credit Investments Inc. has provided commitments towards the facility as an investor.

Proceeds will be used to help fund the purchase of the company by an investor group led by General Atlantic LLC and Kohlberg Kravis Roberts & Co. from Northrop Grumman Corp. in a transaction valued at $1.65 billion.

Other financing for the buyout will come from $310 million of senior subordinated notes (mezzanine debt) that has been pre-placed. KKR Capital Markets arranged the mezzanine financing and Highbridge Mezzanine Partners is the lead investor.

Closing on the transaction is expected to take place in the fourth quarter, subject to customary approvals.

TASC is a Chantilly, Va.-based provider of advanced systems engineering and technical assistance to the defense, intelligence, federal, state and local markets.

Fairway Market sets talk

Fairway Market came out with price talk on its $100 million five-year term loan as the deal was launched to investors with a bank meeting on Thursday, according to a market source.

The term loan is being talked at Libor plus 800 bps with a 2.5% Libor floor and an original issue discount in the 97 to 98 area, the source said.

The company is also getting a $15 million 41/2-year revolver.

Credit Suisse and Jefferies are the lead banks on the $115 million deal, with Credit Suisse the left lead.

Proceeds will be used to refinance existing debt and for expansion capital.

Fairway is a supermarket chain with locations in New York and New Jersey.

Princeton wrapping soon

Princeton Review's $96 million senior secured credit facility is anticipated to be completed on Friday in terms of syndication and it is thought that terms will remain unchanged from launch, according to a market source.

The facility consists of a $15 million revolver and an $81 million term loan, with both tranches priced at Libor plus 600 bps with a 2% Libor floor and an original issue discount of 97.

The financing structure is different than what the company initially outlined in an 8-K filed with the Securities and Exchange Commission in October.

In that filing, it was said that the financing would include a $50 million credit facility priced at Libor plus 600 bps, comprised of a $10 million revolver and a $40 million term loan, $50 million of 51/2-year senior subordinated notes priced at 17.5%, $25 million of 61/2-year junior subordinated notes priced at 17.5% PIK, and a $40 million three-year bridge loan initially priced at 15.5%, increasing to 17.5% after 12 months.

Princeton led by GE

GE Capital is the lead bank on the Princeton Review credit facility that will be used to help fund the acquisition of Penn Foster Education Group Inc. from the Wicks Group of Cos. LLC for $170 million in cash.

Other financing for the acquisition will come from $51 million of senior subordinated notes.

Pro forma for the transaction, the company's senior leverage will be about 2.5 times and total leverage will be about 4.0 times.

Closing on the acquisition is expected by the end of November, subject to customary regulatory approvals, including expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and other conditions.

Princeton Review is a Framingham, Mass.-based provider of college and graduate school test preparation and private tutoring. Penn Foster is a Scranton, Pa.-based provider of online education.

Wynnewood completes deal

Wynnewood Refining Co. closed and funded its $260 million credit facility at the end of last week after spending a few months in the primary, according to a market source.

The deal ended up comprised of a $110 million term loan (B2/BB-) priced at Libor plus 675 bps with a 3% Libor floor and an original issue discount of 90, and a $150 million asset-based revolver, the source said.

At launch, back in July, the term loan was talked with a size of up to $150 million with price talk of Libor plus 650 bps to 700 bps with a 3% Libor floor and a discount of 90.

The term loan was downsized because the company sold a pipeline and didn't need as much debt, the source explained.

Deutsche Bank acted as the lead bank on the deal that is being used to refinance debt and for general corporate purposes.

Wynnewood, a wholly owned subsidiary of Gary-Williams Energy Corp., is based in Wynnewood, Okla.

Skype closes

eBay Inc. completed the sale of SkypeTechnologies to an investor group led by Silver Lake and including Joltid Ltd., the Canada Pension Plan Investment Board and Andreessen Horowitz, according to a news release.

To help fund the transaction, Skype got a new $730 million credit facility (B1/B+), consisting of a $700 million five-year term loan priced at Libor plus 700 bps with a 2% Libor floor and an original issue discount of 971/2, and a $30 million four-year revolver.

When the deal first launched, the term loan was talked at Libor plus 600 bps with an original issue discount of 97. Pricing and the discount were then increased to Libor plus 750 bps with a discount of 96 before firming at the current levels.

In addition, the term loan was upsized from $600 million after a litigation settlement agreement was reached with Joltid and Joost NV, giving Skype ownership over all software previously licensed from Joltid and ending all litigation against the investor group and eBay at the closing of the acquisition.

The extra $100 million of term loan funds came from eBay and the investor group under the condition that the debt can't be sold for at least six months.

JPMorgan, Barclays and RBC Capital Markets acted as the lead banks on the credit facility.

Skype is a Luxembourg-based software that enables individuals and businesses to make free video and voice calls, send instant messages and share files with other Skype users.

RehabCare frees to trade

Moving to the secondary market, RehabCare's credit facility allocated and broke for trading with the term loan B quoted above its original issue discount price, according to a trader.

The term loan B was seen at 99¼ bid, 99¾ offered on the break, it then got as high as 99¾ bid, par ¼ offered but, by late day, it had settled back down to 99 3/8 bid, 99 7/8 offered, the trader said.

The $450 million term loan B is priced at Libor plus 400 bps with a 2% Libor floor and it was sold at an original issue discount of 98.

During syndication, the term loan B was downsized from $500 million as underwriters of the company's common stock offering exercised in full their option to purchase an additional 810,000 shares of common stock at the public offering price of $24 per share.

Including the 5.4 million shares of common stock that the company priced, the equity offering raised about $149 million in proceeds.

RehabCare gets revolver, too

RehabCare's $575 million senior secured credit facility (Ba3/BB) also includes a $125 million revolver that is priced at Libor plus 400 bps.

The revolver is expected to be substantially unfunded at the close of the transaction.

Bank of America, RBC and BNP Paribas are the lead banks on the deal.

Proceeds from the credit facility and the common stock offering will be used to fund the acquisition of Triumph HealthCare for $570 million.

Closing on the acquisition is expected to take place on Dec. 1, pending customary closing conditions, including regulatory approvals.

RehabCare is a St. Louis-based provider of physical rehabilitation services. Triumph HealthCare is a Houston-based developer and operator of long-term acute care hospitals.

TD Ameritrade up on repayment

TD Ameritrade's term loan B gained some ground on Thursday after the company revealed plans to repay the debt, according to a trader.

The term loan B was quoted at 98 bid, no offers, compared to levels of 96¼ bid, 97¼ offered on Wednesday, the trader said.

In a 424B5 filed with the SEC, TD Ameritrade said that it will repay its term loans using proceeds from senior notes offerings and cash on hand.

As of Nov. 18, there was $140.6 million outstanding under the company's term loan A and $1.266 billion outstanding under its term loan B.

TD Ameritrade is an Omaha, Neb.-based provider of securities brokerage services and technology-based financial services.

Conseco rises

Conseco's term loan was also stronger in trading on the back of a paydown announcement, according to a trader.

The term loan was quoted at 90½ bid, 92½ offered, up from 89½ bid, 91½ offered, the trader said.

On Thursday morning, Conseco revealed plans to use 50% of the net proceeds from a common stock offering to repay debt under its senior credit facility.

Remaining proceeds from the offering will be used for general corporate purposes.

Conseco is a Carmel, Ind.-based developer, marketer and administrator of supplemental health insurance, annuity, individual life insurance, and other insurance products for senior and middle-income markets.

Sally Beauty gains with numbers

In more trading happenings, Sally Beauty's term loan B was a touch better on Thursday after fiscal fourth quarter numbers came out, according to traders.

The term loan B was quoted by one trader at 94¾ bid, 95 3/8 offered, up from 94½ bid, 95 1/8 offered. A second trader, however, had the term loan B quoted at 94½ bid, 95 1/8 offered, versus 94½ bid, 95 offered on Wednesday, but said that levels had gone as high as 94¾ bid, 95½ offered immediately after the news before coming back in for no particular reason.

For the fiscal 2009 fourth quarter, Sally Beauty reported net earnings of $27 million, or $0.15 per share, compared to net earnings of $21.5 million, or $0.12 per share, in the 2008 fourth quarter.

Net sales for the quarter were $676.2 million, an increase of 0.6% from $672.2 million in the previous year.

Consolidated gross profit for the quarter was $319.8 million, an increase of 1.5% over the prior year's gross profit of $314.9 million.

Adjusted EBITDA for the quarter was $90.1 million, an increase of 5.3% from $85.6 million for the fiscal 2008 fourth quarter.

Sally Beauty pays down debt

During the fourth quarter, Sally Beauty repaid $20 million of its senior term loans and there were zero borrowings under the ABL revolving credit facility.

At the end of the quarter, borrowing capacity under the ABL facility was about $325.6 million.

In addition, as of Sept. 30, cash and cash equivalents were $54.4 million and debt, excluding capital leases, totaled $1.7 billion.

Sally Beauty is a Denton, Texas-based specialty retailer and distributor of professional beauty supplies.

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