Valeant dips, Ocwen up in trading; Riverbed, National Mentor, Armacell, Constantia revised

By Sara Rosenberg

New York, Feb. 23 – Valeant Pharmaceuticals International Inc.’s term loans were a little softer in the secondary market on Monday following an announcement that the company is acquiring Salix Pharmaceuticals Ltd., and Ocwen Financial Corp.’s term loan was better with news of an agreement to sell certain residential mortgage servicing rights.

Moving to the primary market, Riverbed Technology Inc. upsized its term loan, trimmed the spread, added a pricing step-down and adjusted the original issue discount due to strong demand, and National Mentor Holdings Inc. (Civitas Solutions Inc.) revised the discount on its incremental term loan B.

Also, Armacell tightened the offer price on its tack-on term loans and reduced pricing on its incremental euro debt, which is resulting in a repricing of its existing euro loan, and Constantia Flexibles lowered pricing on its term loans for a second time.

Furthermore, Vogue International moved up the commitment deadline on its add-on term loan, and Energy Transfer Equity LP released price talk on its term loan with launch.

Valeant trades lower

Valeant Pharmaceuticals’ term loan B, C and D debt fell to 99½ bid, par offered form 99¾ bid, par ¼ offered after the company announced an agreement to buy Salix Pharmaceuticals for $158 per share in cash, or about $14.5 billion, according to a trader.

Salix’s term loan was unchanged on the news at 99 7/8 bid, par 1/8 offered, the trader said.

To fund the transaction, Valeant intends to get $5.55 billion of incremental term loan debt and issue $9.6 billion of senior unsecured notes, but only if an amendment to its existing credit facility is obtained.

The term loan debt is split between a $1 billion incremental five-year term loan A and a $4.55 billion seven-year incremental term loan B, of which $2.6 billion will be delayed-draw for 60 days from the closing date.

Pricing on the incremental term loan A is expected at Libor 225 basis points, with step-downs based on leverage, and the term loan B is expected at Libor plus 350 bps with a 0.75% Libor floor and 101 soft call protection for six months, the company disclosed in an 8-K filed with the Securities and Exchange Commission.

The notes are backed by a commitment for a $9.6 billion one-year bridge loan priced at Libor plus 575 bps with a 1% Libor floor. The spread will increase by 50 bps every 90 days until it hits a specified cap.

Valeant backstop commitment

If Valeant is unable to amend its existing credit facility, it will refinance the debt. A backstop commitment for a $11.7 billion credit facility was obtained to prepare for that possibility.

The backstop facility consists of a $500 million five-year revolver, a $2.75 billion five-year term loan A, a $6.95 billion seven-year term loan B, of which $2.6 billion will be delayed-draw for 60 days from the closing date, and a $1.5 billion seven-year euro equivalent term loan B.

Pricing on the backstop term loan A and revolver is expected at Libor plus 250 bps with step-downs based on leverage, and the backstop term loan B is expected at Libor plus 375 bps with a 0.75% Libor floor and 101 soft call protection for six months.

Also, if the amendment is not obtained, the company will issue $550 million of senior secured notes, $500 million of euro equivalent senior secured notes, $8.35 billion of senior unsecured notes and $1.4 billion of euro equivalent senior unsecured notes.

The notes are backed by a commitment for a $1.05 billion one-year secured bridge loan at Libor/Euribor plus 425 bps with a 1% floor and a $9.75 billion one-year unsecured bridge loan at Libor/Euribor plus 575 bps with a 1% floor. Spreads on the bridge loans will increase by 50 bps every 90 days until a cap.

Valeant lead banks

Deutsche Bank Securities Inc., HSBC Securities (USA) Inc., The Bank of Tokyo-Mitsubishi UFJ Ltd., DNB Markets, Inc. and SunTrust Robinson Humphrey Inc. are leading Valeant’s proposed new debt.

Closing is expected in the second quarter, subject to customary conditions and regulatory approval.

Net debt to adjusted pro forma EBITDA will be around 5.6 times.

Valeant is a Laval, Quebec-based specialty pharmaceutical company. Salix is a Raleigh, N.C.-based developer and marketer of prescription pharmaceutical products and medical devices for the prevention and treatment of gastrointestinal diseases.

Ocwen rises

Ocwen Financial’s term loan gained to 96 bid, 97 offered from 95½ bid, 96½ offered after the company revealed that it is selling residential mortgage servicing rights on a portfolio, consisting of about 81,000 performing loans owned by Freddie Mac with a total principal balance of around $9.8 billion to Nationstar Mortgage LLC, a trader remarked.

Closing is expected by March 31 and the loan servicing is expected to transfer in April, subject to approvals by Freddie Mac and FHFA and other customary conditions.

Ocwen is an Atlanta-based servicer and originator of mortgage loans.

Riverbed reworks deal

Switching to the primary, Riverbed Technology increased its seven-year first-lien term loan to $1,575,000,000 from $1,525,000,000, cut pricing to Libor plus 500 bps from Libor plus 525 bps, added a step-down to Libor plus 475 bps based on total first-lien leverage and moved the original issue discount to 99½ from 98½, according to a market source.

As before, the term loan has a 1% Libor floor and 101 soft call protection for six months.

The company’s now $1,675,000,000 senior secured credit facility (B1/B) also includes a $100 million five-year revolver.

With the changes, the commitment deadline was moved up to noon ET on Tuesday from Thursday, the source continued.

Credit Suisse Securities (USA) LLC, Citigroup Global Markets Inc., Barclays and Morgan Stanley Senior Funding Inc. are leading the deal.

Riverbed being acquired

Proceeds from Riverbed’s credit facility, $614 million of cash on the balance sheet, $575 million of notes and $1,625,000,000 of equity will be used to fund its buyout by Thoma Bravo LLC and Teachers’ Private Capital for $21.00 per share in cash, or a total of about $3.6 billion.

Originally, the notes were planned at $625 million but were reduced with the term loan upsizing.

Closing is expected in the first half of this year, subject to stockholder approval, regulatory approvals and other customary conditions.

Riverbed is a San Francisco-based technology company that specializes in improving the performance of networks and networked applications.

National Mentor updates OID

National Mentor Holdings Inc. changed the original issue discount on its fungible $55 million incremental term loan B due Jan. 31, 2021 to 99 from the 98¾ area, a market source remarked.

The incremental loan is still priced at Libor plus 325 bps with a 1% Libor floor, which matches pricing on the company’s existing $595.5 million term loan B due Jan. 31, 2021, and all of the debt is still getting 101 soft call protection for six months.

Commitments were due at noon ET on Monday.

Barclays, Bank of America Merrill Lynch and UBS AG are leading the deal that will be used to redeem 12½% senior notes.

National Mentor is a Boston-based provider of home and community-based health and human services.

Armacell tweaks deal

Armacell modified the offer price on its $36 million tack-on first-lien covenant-light term loan debt due July 2, 2020 to par from 99½, and kept pricing at Libor plus 450 bps with a 1% Libor floor, in line with existing U.S. term loan pricing, according to a market source.

In addition, the offer price on the €33 million tack-on first-lien covenant-light term loan debt due July 2, 2020 was also changed to par from 99½, and the spread was cut to Euribor plus 450 bps from Euribor plus 475 bps, with the 1% floor remaining intact, the source said.

The tack-on debt, which will fund two bolt-on acquisitions, still have six months of 101 soft call protection.

With the euro loan flex, the Luxembourg-based manufacturer of elastomeric foams is lowering pricing on its existing €118.8 million term loan due July 2, 2020 to Euribor plus 450 bps with a 1% floor from Euribor plus 475 bps with a 1% floor.

Credit Suisse Securities (USA) LLC, BNP Paribas Securities Corp., HSBC Securities (USA) Inc. and ING are leading the deal for which commitments continue to be due at 5 p.m.ET on Tuesday.

Constantia flexes once more

Constantia Flexibles lowered pricing on its €200 million U.S. dollar-equivalent seven-year covenant-light term loan B, its €639 million seven-year covenant-light term loan B and its €150 million delayed-draw term loan to Libor/Euribor plus 375 bps from revised talk of Libor/Euribor plus 400 bps and from initial talk of Libor/Euribor plus 425 bps to 450 bps, according to a market source, who said the 1% floor and 101 soft call protection for one year on the tranches were unchanged.

The funded term loans are still offered at 99½ and the delayed-draw term loan is still offered at 99.

Previously in syndication, the U.S. term loan was downsized from €300 million equivalent, the euro term loan was upsized from €539 million and the discount on the funded tranches was revised from 99.

J.P. Morgan Securities LLC and UniCredit leading the deal that will be used to help fund the roughly €2.3 billion buyout of the company by the Wendel Group from One Equity Partners and the H. Turnauer Foundation.

Closing is expected in the first half of this year, subject to approval from antitrust authorities.

Constantia Flexibles is a Vienna-based manufacturer of flexible packaging products and labels.

Vogue revises deadline

Vogue International accelerated the commitment deadline on its $205 million add-on term loan to noon ET on Wednesday from Thursday, a source said.

The add-on loan is talked at Libor plus 475 bps with a 1% Libor floor, an original issue discount of 99 and 101 soft call protection for one year.

Goldman Sachs Bank USA and Bank of America Merrill Lynch are leading the deal that will be used to fund a dividend.

Vogue is a Tampa Bay, Fla.-based manufacturer and distributor of salon-heritage hair care and other personal care products.

Energy Transfer sets talk

In more primary news, Energy Transfer Equity held its lender call on Monday, launching its $500 million first-lien term loan (Ba2/BB/BB+) due Dec. 2, 2019 with talk of Libor plus 350 bps to 375 bps with a 0.75% Libor floor, an original issue discount of 99 and 101 soft call protection for one year, according to a market source.

Commitments are due at 5 p.m. ET on March 2.

Credit Suisse Securities (USA) LLC, Bank of Tokyo-Mitsubishi, BBVA Compass, BNP Paribas Securities Corp., Credit Agricole Securities (USA) Inc., DNB Bank, Mizuho Securities USA Inc., Sumitomo Mitsui Banking Corp., Intesa Sanpaolo, Natixis Securities North America Inc., ING Capital LLC, ABN Amro Inc., SunTrust Robinson Humphrey Inc., PNC Capital Markets LLC and HSBC Securities (USA) Inc. are leading the deal that will be used to help fund the transfer of 30.8 million Energy Transfer Partners LP common units, Energy Transfer Equity’s 45% interest in the Bakken pipeline project, and $879 million in cash in exchange for 30.8 million newly issued class H units of Energy Transfer Partners

Energy Transfer, a Dallas-based midstream oil and gas company, expects the transaction to close in March.

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