Apple Leisure sets bank meeting; Quanex Building sets talk; banks, CLOs bid for quality

By Paul A. Harris

Portland, Ore., Sept. 15 – The bank loan market saw better buyers in reasonably active trading on Tuesday, a trader said.

CLOs have been muted of late, said the trader.

However banks and CLOs are buying lower coupon, higher quality paper, the source said.

There was such activity with names like Ziggo and DaVita Healthcare Partners Inc. on Tuesday.

Owens-Illinois Inc. paper saw a pretty aggressive 100½ bid this morning, said the trader, adding that the buyer was a bank.

The loan has a 3½% coupon – Libor plus 275 basis points with a 75-bps floor, the trader recounted.

“In this market that’s pretty aggressive, despite the triple B rating.”

Meanwhile separately managed accounts, which are not sitting on a ton of money, are looking at the new issue calendar, the source said.

And retail buyers, because flows have been manageable, are going down the credit spectrum.

In the primary market the Berry Plastics Corp. LLC’s $1.9 billion first-lien term loan (Ba3/BB-) is going very well, the trader said.

On Monday timing on the deal was moved ahead by a week, with commitments due at Tuesday’s close, whereas the book had previously been expected to remain open until Sept. 22.

A lot of sell-side players remain out of the office because of the Rosh Hashanah holiday, the source mentioned.

Apple Leisure bank meeting

Apple Leisure Group plans to offer $460 million of term loan debt to investors at a bank meeting on Thursday, according to a market source.

The deal includes a $330 million first-lien term loan and a $130 million second-lien term loan.

Jefferies LLC, Credit Suisse Securities (USA) LLC and Nomura are the leads.

The $510 million credit facility also includes a $50 million revolver.

The Newton Square, Pa.-based travel and resort company plans to use the proceeds to fund a dividend recapitalization.

Quanex price talk

Quanex Building Products Corp. talked its $310 million seven-year covenant-light term loan B with a 375-bps spread to Libor atop a 1% Libor floor, at a reoffer price of 99, according to a market source.

The spread comes 50 bps inside of earlier expectations of Libor plus 425 bps with a 1% Libor floor, which appeared in a document that the company filed with the Securities and Exchange Commission.

Commitments are due Sept. 29.

The term loan has 101 soft call protection for six months.

Wells Fargo Securities LLC is the lead arranger and bookrunner.

The $410 million senior secured credit facility also includes a $100 million five-year asset-based revolver.

According to SEC filings, initial revolver pricing is expected at Libor plus 150 bps and then could range from Libor plus 150 bps to 200 bps based on average excess availability.

The revolver is also expected to have a commitment fee of 25 bps or 37.5 bps based on average daily usage.

Proceeds will be used to help fund the acquisition of Woodcraft Industries for about $248.5 million, to refinance existing debt and for general corporate purposes

Other funds for the transaction will come from cash on hand.

Pro forma debt to EBITDA at close is expected to be 3.2 times.

Closing is targeted for the fourth quarter.

Quanex is a Houston-based supplier of window and door components. Woodcraft is a St. Cloud, Minn.-based supplier of doors and components to original equipment manufacturers in the kitchen and bathroom cabinet industry.

GTT Communications

GTT Communications, Inc. engaged KeyBank and SunTrust to provide $450 million of committed financing backing the acquisition of One Source Networks.

The financing is expected to consist of a new $400 million term loan B and a $50 million revolving credit facility, which will replace GTT’s current credit facility, the company said in a Tuesday press release.

The syndication process for the new debt is to begin immediately.

At closing, GTT said it expects its ratio of total debt to annualized adjusted EBITDA to be about 4 to 1 on a pro forma basis.

The $175 million One Source acquisition will consist of $165 million in cash and about $10 million in GTT common stock, according to the release.

McLean, Va.-based GTT provides cloud networking services.

One Source is an Austin, Texas-based provider of global data, internet, session initiation protocol trunking and managed services to Fortune 1000 companies.

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