PGT and FTD reverse flex by 25 basis points; FTD term loan reduced by $15 million

By Sara Rosenberg

New York, Jan. 30 - PGT Industries Inc.'s term loans were flexed down on Friday by 25 basis points due to overwhelming investor demand. Meanwhile, FTD Inc.'s credit facility was restructured, decreasing the size of the term loan and reducing pricing on the tranche by 25 basis points as well.

PGT's $120 million six-year first lien term loan was reverse flexed to Libor plus 300 basis points from initial pricing of Libor plus 325 basis points, and the $50 million 61/2-year second lien term loan was reverse flexed to Libor plus 625 basis points from initial pricing of Libor plus 650 basis points, a market source said.

Syndication of the deal was expected to go well from the start as initial price talk on the tranches was viewed as pretty enticing, leverage is viewed as relatively low and the business sector in which the company operates is a favorably viewed sector.

And, in fact, according to various sources, the books filled up quickly after the bank meeting was held on Jan. 14, and the tranches were reported as oversubscribed not too long afterward.

There is a also a $25 million five-year revolver that's priced with an interest rate of Libor plus 275 basis points, which was left unchanged.

UBS is the sole bookrunner on the $195 million credit facility that will be used to help support the buyout of PGT by JLL Partners Inc. As part of the leveraged buyout the company will also receive a $157 million equity investment of which $32 million will come from the management team.

Expected ratings on the deal are B1 from Moody's Investors Service and B+ from Standard & Poor's, the source added.

Leverage through the first lien is expected to be 2.9 times, and leverage through the second lien is expected to be 4.1 times, according to a market source.

PGT is a Nokomis, Fla., manufacturer of custom windows, doors and patio rooms.

FTD term loan reduced

FTD's seven-year term loan was reduced to $85 million from $100 million, after a decision to increase a bond offering, and pricing was lowered to Libor plus 275 basis points from Libor plus 300 basis points, according to a source close to the deal.

The $50 million five-year revolver remained unchanged with pricing of Libor plus 275 basis points and a 50 basis points commitment fee.

Credit Suisse First Boston and UBS are joint lead arrangers on the deal.

Proceeds will be used to help support the leveraged buyout of FTD by Green Equity Investors IV LP, an affiliate of Leonard Green & Partners LP.

As part of the LBO, Leonard Green committed equity financing through Green Equity Investors IV LP, a $1.85 billion private equity fund.

This equity contribution was reduced by $10 million to $184 million.

Furthermore, the company opted to upsize its bond deal, which will also be used to support the LBO, by $25 million to $175 million.

As was previously reported, under the terms of the agreement, FTD's stockholders will receive $24.85 per share in cash upon the closing of the merger. The aggregate value of the merger transaction is about $420 million.

In reaction to the company's decision to decrease its term loan, decrease the equity contribution and increase the bond offering, Moody's Investors Service downgraded FTD's senior secured bank facility to B1 from Ba3 and senior subordinated notes to B3 from B2.

"The increase in total debt, coupled with the decrease in equity, results in a higher leverage profile than originally anticipated when the prior ratings were assigned, and this more aggressive profile is inappropriate at the former rating category. The reduction in equity results in the equity percentage of the transaction reducing from roughly 43% of the total to roughly 40% of the total, and total leverage increases from roughly 4.9x to roughly 5.1x," Moody's said.

FTD is a Downers Grove, Ill., floral company.

Commitments for Ply Gem

Commitments have already been flowing in to the books for Ply Gem Industries Inc.'s $300 million senior secured credit facility (B1/B+) that just launched this past Thursday to a small group of investors made up of around 25 accounts, according to a source.

The facility consists of a $65 million five-year revolver with an interest rate of Libor plus 250 basis points and a $235 million seven-year term loan B with an interest rate of Libor plus 275 basis points that is being offering at par.

"It only went out to a limited group of investors only because all of the deals have been blowing out and that just makes it too hard for allocations," the source said. "Commitments are coming in [from those accounts]."

Commitments are due on Feb. 11.

UBS and Deutsche Bank are joint bookrunners, and CIBC and Merrill Lynch are co-arrangers and documentation agents on the facility.

Proceeds from the credit facility will be used to help support the company's acquisition by Caxton-Iseman Capital Inc. from Nortek Inc. in a transaction valued at about $570 million.

Ply Gem is a Kearney, Mo., manufacturer and distributor of products for use in the residential new construction, do-it-yourself and professional renovation markets.

Calpine trades on refi news

Calpine Corp.'s CCFC II revolver was quoted at 98½ bid, 99 offered near the end of the day Friday after trading around a bit over the past two days on refinancing speculation, according to a couple of traders. The bank debt opened Friday morning at 98 bid, 99 offered.

On Thursday morning, the bank debt was seen trading at 97½ and then the bid moved up to the low 98 area "as news got out about an unscheduled bank meeting talking about restructuring and possibly taking out this debt," a trader said.

The revolver comes due in November of this year, and rumors have been circulating that the company is going to act soon to refinance this debt.

Calpine is a San Jose, Calif., power company.

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