Rent-A-Center shifts tranche sizes, adds stepdown in term loan pricing

By Sara Rosenberg

New York, July 8 - There were some changes made to Rent-A-Center Inc.'s $600 million senior credit facility (Ba2) on Thursday that included increasing the size of the revolver, decreasing the size of the term loan and adding a stepdown in pricing to the term loan.

More specifically, the revolver was increased to $250 million from $200 million, while the term loan was decreased to $350 million from $400 million, according to a fund manager.

"I guess they had a lot of bank interest on that," the fund manager said.

Pricing on the revolver and the term loan remained at Libor plus 175 basis points, but pricing on the term loan can now step down to Libor plus 150 basis points if leverage falls below 1.5 times, the fund manager added.

Lehman Brothers and JPMorgan are co-lead arrangers and joint bookrunners on the deal, with Lehman listed on the left.

In addition to repaying the existing facility, Rent-A-Center will use proceeds for general corporate purposes.

Rent-A-Center's existing credit facility contains a $400 million term loan with an interest rate of Libor plus 225 basis points, a $120 million revolver with an interest rate of Libor plus 200 basis points and an $80 million letter-of-credit facility with an interest rate of Libor plus 225 basis points, the spokesman added. At March 31, the company had a total of $397 million outstanding under its term loan and $90.3 million of availability under its revolver.

The Plano, Texas operator of rental purchase stores expects to complete the transaction in the third quarter.

Syndication of Yonkers on hold

Syndication of Yonkers Raceway's $185 million term loan "is in a holding pattern" due to a state court of appeals decision on Wednesday that found the allocation of money from slot machines at racetracks to be unconstitutional, according to a market source.

"Satisfactory resolution of this issue is a closing condition," the source said. "This is a big, big issue. Because the state has an interest in it, I cautiously believe that it will get resolved quickly. The deal was looking to close by month's end. If it's resolved next week it could be on time. But if this takes like three weeks, it may delay closing."

Up until this point, the deal has been progressing smoothly with a book that was filling nicely.

Proceeds from the term loan will be used by the Yonkers, N.Y. horse racing track to fund renovations and additions to the facility that will enable it to have a 5,500 slot racetrack casino. It is expected that construction will take about nine months.

According to a New York Times article, the Appellate Division of the State Supreme Court ruled unanimously that the state's video lottery law was unconstitutional because only a portion of the profits would be used to support education. The decision, if upheld, would likely force the state and the tracks to revise the revenue-sharing plan.

The state has until July 30 to present a judge with its plans to comply with the court order on education, but New York Governor George E. Pataki and the Legislature have yet to agree on a plan, the article added.

Technically, the entire $185 million tranche is considered a delayed draw term loan, but some of the loan will be drawn immediately at closing. There is a 100 basis points undrawn fee on the portion of the loan that is not borrowed.

Pricing on the term loan is Libor plus 375 basis points but it drops down to Libor plus 325 basis points upon opening of the renovated facility.

The term loan is being offered at par.

Merrill Lynch is the left lead bank on the deal, with Bear Stearns as co-arranger and syndication agent.

Revlon cools off

Revlon Consumers Products Corp.'s term loan settled down a bit on Thursday with the paper quoted at 102 7/8 to 103 bid, 103 ¼ offered, depending on which market source was asked, compared to previous closing levels of 103 ½ bid, 104 offered.

"A lot of people probably got filled yesterday at those prices and it cooled off a bit. I think it might go back to those levels once accounts look at this again and decide they need more of this."

Late Wednesday, the new deal stormed its ways into the secondary with the term loan B first bid at 102 1/8 and then skyrocketing all the way to 103 5/8 bid before settling down at 103 ½ bid in the evening.

The six-year term loan (B3/B-) is sized at $800 million, is priced with an interest rate of Libor plus 600 basis points and contains call protection of 105 in year one, 103 in year two and 101 in year three.

Revlon is a New York manufacturer and seller of cosmetics and skin care, fragrance and personal care products.

CACI up again on contract news

CACI Internationals Inc.'s bank debt continued to head higher, still in reaction to Wednesday's contract news, with the paper quoted stronger by about a quarter of a point at par bid, par ½ offered, a market source said.

"I still think it's got room to go," the source said. "Good rating. Decent spread. Now that the uncertainty is cleared up, I think this thing will trade back up to 101."

On Wednesday, the company announced that the General Services Administration decided not to bar or suspend the company from contracts. CACI has been under investigation due to allegations of improper employee behavior toward prisoners in Iraq.

Immediately following this news, the paper moved up to 99¾ bid, par ¼ offered, up from Tuesday's levels of 99 bid, 99½ offered.

CACI is an Arlington, Va. provider of IT and network solutions.

Skilled Healthcare lowers pricing

Skilled Healthcare Group Inc. reduced pricing on all three tranches in its $260 million credit facility, according to a syndicate document.

The $35 million five-year revolver (B1/B) is now priced at Libor plus 275 basis points with a 50 basis points commitment fee, compared to initial pricing of Libor plus 300 basis points with a 50 basis points commitment fee.

The $140 million six-year first-lien term loan (B1/B) in now priced with an interest rate of Libor plus 275 basis points, compared to initial pricing of Libor plus 300 basis points.

And the $85 million 61/2-year second-lien term loan (B3/CCC+) is now priced at Libor plus 700 basis points, compared to initial pricing of Libor plus 750 basis points.

Credit Suisse First Boston and Goldman Sachs are joint lead arrangers and joint bookrunners on the refinancing deal.

Skilled Healthcare is a Foothill Ranch, Calif., operator of long-term care facilities and a provider of a full continuum of post-acute care services.

NEP resurfaces

NEP Broadcasting LLC relaunched its credit facility on Thursday after pulling the leveraged buyout financing deal from market in June.

This time around, Wachovia is sole books on the deal but Bank of New York has committed on an agent-tier level "in name only," a market source said. Wachovia and Bank of New York were joint leads on the previous deal that was pulled.

Although the facility did launch, details on the deal are not being revealed at this time, the source added.

In May, NEP launched a $210 million credit facility consisting of a $20 million five-year revolver, a $150 million 61/2-year term loan B and a $40 million seven-year second lien term loan. It was later changed to consist of a $145 million term loan B, a $45 million second lien term loan and a $20 million revolver. The term loan B was priced at Libor plus 325 basis points and the $45 million seven-year second lien term loan was priced at Libor plus 650 basis points. Subsequently structure and pricing on the deal were no longer being publicized as the deal appeared to be fluid.

In June, it was disclosed that the credit facility was pulled from the market "in its current form" with hope "that there will be something coming" although the structure or form in which the deal would launch was still to be determined, an informed source previously told Prospect News.

Proceeds from the credit facility were going to be used help fund Apax Partners and Spectrum Equity Investors' acquisition of NEP from Wachovia Capital Partners.

NEP is a Pittsburgh provider of outsourced media services.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.