Beacon tightens talk; Tronox loan ‘beaten up’; Yom Kippur session sees low trading volume

By Paul A. Harris

Portland, Ore., Sept 23 – Wednesday’s Yom Kippur session passed in relative quiet, as many market participants were away from their desks.

Cash loans traded an eighth to a quarter of a point lower, in very low volume, a trader said.

The LCDX 22 bank loan index was unchanged on the day at 100½ bid, 101½ offered, a hedge fund manager said.

The bank loans of Tronox, Inc. was beaten up on Wednesday, a bank loan trader said, spotting that loan at 91 bid, 92 offered late in the afternoon, down from 93 bid in the morning.

Tronox bonds also sold off, as did the company shares.

The Tronox 6 3/8% notes due 2020 were 68¾ bid, 70 offered on Wednesday afternoon, down from 70¼ bid, 71 on Tuesday, and 72½ bid, 73½ offered at the beginning of the week, according to an asset manager who added that the market for titanium dioxide (Ti O2) pigment, the company’s principle product, is struggling.

Away from the secondary market, new loan business could heat up, a trader said.

Banks and CLOs have been bidding up quality names such as Dollar Tree Inc. and Hilton Worldwide Holdings Inc., both of which are trading above par, the trader said.

But retail investors are having difficulty reconciling themselves to above-par prices when Cablevision Systems Corp. is in the market with $2.3 billion of seven-year term loan B paper talked at Libor plus 350 basis points with a 1% Libor floor at 99.

Beacon tightens talk

Beacon Roofing Supply Inc. tightened spread talk on its $450 million seven-year covenant-light senior secured term loan B (B2/BB+) on Wednesday.

The drawn margin is Libor plus 300 bps, revised from earlier talk of Libor plus 325 to 350 bps.

Discount talk remains unchanged at 99.5. The 1% Libor floor also remains unchanged.

Commitments are due at 5 p.m. ET Thursday.

The deal is heard to be four-times oversubscribed, and going well, sources said.

The term loan has 101 soft call protection for six months from closing and amortizes at a rate of 1% per annum, the source said.

Mandatory prepayments are from a 50% excess cash flow sweep that steps down to 25% and 0%, 100% of debt issuance excluding permitted debt, and 100% of asset sales and insurance proceeds, subject to usual and customary reinvestment rights.

There is an incremental allowance of the greater of $250 million and such other amount subject to pro forma compliance with senior secured leverage of 3 times, the source continued.

Citigroup, Wells Fargo, J.P. Morgan, BofA Merrill Lynch and SunTrust are the joint lead arrangers for the acquisition deal.

Beacon Roofing also tightened talk on its concurrent junk bond deal. The latest talk on the notes is 6 3/8% to 6½%, down from earlier talk of 6½% to 6¾%.

Park Resorts sets talk

Park Resorts talked its £550 million seven-year term loan B with a 475 to 500 bps spread to Libor at 99, according to a market source.

There is no Libor floor.

The commitment deadline is Oct. 7.

Barclays, J.P. Morgan Securities LLC and RBS are the bookrunners on the deal.

Proceeds will be used to refinance existing debt and to support the merger of Park Resorts and Parkdean.

Park Resorts and Parkdean are holiday park operators in the United Kingdom.

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