Wheelabrator, Grocery Outlet changes emerge, free to trade; Schaeffler reveals final terms

By Sara Rosenberg

New York, Oct. 15 – Wheelabrator Technologies Inc. (Granite Acquisition Inc.) shifted some funds to its revolver from its term loan C, finalized spreads on its first- and second-lien term loans, sweetened first-lien call protection and then freed up for trading on Wednesday.

Also, Grocery Outlet Inc. (GOBP Holdings Inc.) upsized its first-lien term loan while downsizing its second-lien term loan, increased pricing on the tranches, widened the issue price on the second-lien debt, extended the first-lien call premium and then it too hit the secondary market.

And, in more happenings, Schaeffler (INA Beteiligungsgesellschaft GmbH) firmed U.S. and euro term loan B tranche sizes, set spreads at the high end of guidance and modified the discount on the U.S. loan, Toledo Molding & Die Inc. withdrew its term loan B from market, and Essar Steel Algoma released price talk with launch.

Wheelabrator tweaked, trades

Wheelabrator reduced its first-lien covenant-light term loan C (Ba2/BB-) to $55 million from $75 million, set pricing on the tranche, as well as on its $1.25 billion seven-year first-lien covenant-light term loan B (Ba2/BB-), at Libor plus 375 basis points, the high end of the Libor plus 350 bps to 375 bps talk, and pushed out the 101 soft call protection on both term loans to one year from six months, according to a market source.

Furthermore, pricing on the company’s $260 million eight-year second-lien covenant-light term loan (B1/B) firmed at Libor plus 700 bps, the low end of the Libor plus 700 bps to 725 bps talk, the source said.

As before, all of the term loans have a 1% Libor floor and an original issue discount of 99, and the second-lien loan has hard call protection of 102 in year one and 101 in year two.

To account for the term loan C downsizing, the five-year revolver (Ba2/BB-) was upsized to $145 million from $125 million, the source continued.

With final terms in place, the credit facility emerged in the secondary market on Wednesday afternoon, with the first-lien loan seen at 99 1/8 bid, 99 5/8 offered and the second-lien loan seen at 99½ bid, par ½ offered, a trader remarked.

Wheelabrator being acquired

Proceeds from Wheelabrator’s $1.71 billion credit facility and about $500 million in equity will be used to fund its buyout by Energy Capital Partners for $1.94 billion in cash from Waste Management Inc.

Deutsche Bank Securities Inc., Barclays and BNP Paribas Securities Corp. are leading the deal.

Closing is expected late this year, subject to Federal Energy Regulatory Commission approval and other customary conditions.

Wheelabrator is a Hampton, N.H.-based owner and operator of waste-to-energy facilities and independent power-producing facilities.

Grocery Outlet revised

Grocery Outlet lifted its seven-year first-lien term loan B to $450 million from $440 million, increased pricing to Libor plus 475 bps from talk of Libor plus 400 bps to 425 bps and extended the 101 soft call protection to one year from six months, while keeping the 1% Libor floor and original issue discount of 99 intact, a market source said.

Meanwhile, the eight-year second-lien term loan was cut to $200 million from $210 million, the spread was changed to Libor plus 825 bps from talk of Libor plus 750 bps to 775 bps, and the discount widened to 98½ from 99, the source continued. This tranche still has a 1% Libor floor and hard call protection of 102 in year one and 101 in year two.

The company’s $725 million senior credit facility also includes a $75 million revolver.

Grocery frees up

Recommitments for Grocery Outlet’s credit facility were due at 2 p.m. ET and, after that deadline, the debt broke for trading, with the first-lien term loan quoted at 99¼ bid, 99¾ offered and the second-lien term loan quoted at 98¾ bid, 99¼ offered, a trader said.

Morgan Stanley Senior Funding Inc., Deutsche Bank Securities Inc. and Jefferies Finance LLC are leading the deal that will be used to help fund the buyout of the company by Hellman & Friedman LLC from Berkshire Partners LLC.

Grocery Outlet is an Emeryville, Calif.-based grocery store operator.

Schaeffler updates deal

Back in the primary, Schaeffler finalized its U.S. term loan B size at $1.3 billion and its euro term loan B size at €750 million, set pricing on both tranches at Libor/Euribor plus 350 bps, the high end of the Libor/Euribor plus 325 bps to 350 bps talk, and widened the original issue discount on the U.S. loan to 99 from 99½, according to a market source.

At launch, the loan size was described as €1.8 billion equivalent with the breakdown of the euro and U.S. dollar tranches to be determined.

As before, all of the term loan B debt (Ba2) due May 15, 2020 has a 0.75% floor and 101 soft call protection for six months, and the euro tranche has an original issue discount of 99½.

Schaeffler sets deadlines

Recommitments for the U.S. portion of Schaeffler’s term loan B were due at 5 p.m. ET on Wednesday and for the euro portion are due at 11 a.m. GMT on Thursday, the source added.

Citigroup Global Markets Inc., Deutsche Bank Securities Inc., HSBC Securities, Commerzbank, J.P. Morgan Securities LLC and UniCredit are leading the deal that will be used to refinance existing term loans, with Citigroup the left lead on the U.S. debt and Deutsche the left lead on the euro debt.

Schaeffler is a Herzogenaurach, Germany-based manufacturer of bearings for autos and industrial OEMs.

Toledo Molding pulled

Toledo Molding & Die removed its $225 million seven-year term loan B from market due to unfavorable conditions, a market source said.

Talk on the loan was Libor plus 500 bps to 525 bps with a 1% Libor floor, an original issue discount of 99 and 101 soft call protection for one year.

J.P. Morgan Securities LLC was leading the deal that was going to be used to refinance existing debt and fund a dividend.

Toledo Molding is a Toledo, Ohio-based full-service automotive supplier that designs, develops and manufactures highly engineered molded thermoplastic components and assemblies.

Essar discloses talk

Also in the primary, Essar Steel Algoma held its bank meeting on Wednesday, launching its $350 million 4¾-year first-lien term loan (Ba3/B+) with talk of Libor plus 475 bps to 500 bps with a 1% Libor floor, an original issue discount of 99 and 101 soft call protection for one year, according to a market source.

Commitments are due on Oct. 28, the source said.

Deutsche Bank Securities Inc., Goldman Sachs Bank USA and Jefferies Finance LLC are leading the deal that will be used to help refinance the company’s capital structure.

Essar Steel is a Sault Ste. Marie, Ont.-based manufacturer of hot and cold rolled steel products.

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