Dynegy dips on loan issues; Great Point breaks, Fairmount, AVG, Fresenius, IMS tweak deals

By Sara Rosenberg

New York, March 9 - Dynegy Inc.'s strip of institutional bank debt was weaker on Wednesday on the back of the company's warnings of potential non-compliance with covenants, which it said could result in a bankruptcy filing.

In more trading happenings, Great Point Power LLC's amended term loan freed up for trading above par, and MidContinent Communications' recently allocated loan headed higher.

Over in the primary market, Fairmount Minerals Ltd. decided to flex pricing higher on its term loan B and is now offering the paper to investors at a discount price, and AVG Technologies made its previously rumored pricing changes official.

Also, Fresenius SE added a pricing step-down and call protection to its term loan D while firming up the offer price at the tight end of talk, and IMS Health Inc. eliminated its delayed-draw term loan and upsized its funded loans.

Additionally, Pilot Travel Centers LLC, Aspen Dental Management Inc., Chemtura Corp., TASC Inc. and Douglas Dynamics Inc. released price talk on their new deals as all of these transactions were launched to lenders during the session.

Furthermore, Farley's & Sathers Candy Co. Inc. and Harron Communications LP announced plans to bring new deals to market, and Surgery Center Holdings Inc. set timing on the launch of its credit facility.

Dynegy retreats

Dynegy's strip of institutional bank debt headed lower in trading as the company said in a 10-K filed with the Securities and Exchange Commission late Tuesday that it does not expect to be able to meet covenants going forward and that, if a fix is not found, bankruptcy could be in the future, according to traders.

The strip of debt was quoted by one trader at 98¾ bid, 99¼ offered, down from 99¼ bid, 99¾ offered, and by a second trader at 98 7/8 bid, 99 3/8 offered, down from 99¼ bid, 99¾ offered.

The company said in the filing that based on available forward commodity price curves and considering current derivative contracts, it will likely be unable to comply with the EBITDA to consolidated interest expense covenant, particularly in the third and fourth quarters of this year.

Additionally, the company expects its available liquidity will continue to be reduced as a result of borrowing limitations under the covenant regarding the ratio of secured debt to EBITDA.

Dynegy seeks solution

Dynegy went on to disclose in the 10-K filing that it is attempting to amend or replace the existing credit facility to avoid non-compliance with covenants, adding that any amended or new deal will likely be smaller than the current $1.8 billion capacity currently available and carry higher pricing.

The company may also seek additional sources of liquidity in an effort to secure sufficient cash to meet its operating needs, which could include asset sales, public or private issuances of debt, equity or equity-linked securities, debt for equity swaps, or any combination thereof.

At Dec. 31, the company had a $68 million term loan due in April 2013, an $850 million synthetic letter-of-credit facility due in April 2013 and a $1.08 billion revolver due in April 2012. Pricing on the credit facility ranges from Libor plus 337.5 basis points to 375 bps based on ratings.

Dynegy is a Houston-based producer and seller of electric energy, capacity and ancillary services.

Great Point frees up

Great Point Power's amended $216.5 million term loan made its way into the secondary market on Wednesday, with levels quoted at par ½ bid, 101 offered, according to a market source.

Pricing on the power generation company's loan is Libor plus 325 bps, after firming at the wide end of the initial Libor plus 300 bps to 325 bps talk, with a 1% Libor floor, and it was sold at par. There is 101 soft call protection for one year.

Barclays is the lead bank on the deal that is being used to reprice/refinance an existing term loan obtained early last year at an original size of $220 million to fund the acquisition of four power generation plants and a stake in the Neptune transmission facility from Energy Investors Funds.

The 2010 loan was done at pricing of Libor plus 350 bps with a 2% Libor floor, and it was sold at an original issue discount of 99.

MidContinent rises

MidContinent Communications' $350 million term loan B moved up to par 5/8 bid, after breaking for trading on Wednesday at par 3/8 bid, par 7/8 offered, according to a trader.

Pricing on the term loan B is Libor plus 300 bps, with a step-down to Libor plus 275 bps when leverage is 3.5 times, and a 1% Libor floor. It was sold at par and includes 101 soft call protection for one year.

During syndication, pricing was reduced from Libor plus 325 bps and the Libor floor was tightened from 1.25%.

The company's $675 million credit facility (B1/B+) also provides for a $125 million revolver and a $200 million term loan A, with both of these tranches priced in line with initial talk at Libor plus 275 bps.

SunTrust, Wells Fargo, RBC and U.S. Bank are the joint bookrunners on the deal.

MidContinent refinancing

Proceeds from MidContinent Communications' credit facility will be used to replace an existing credit facility that has the same structure but higher pricing. Currently, the company's pro rata debt is priced about 100 bps higher than the new revolver and term loan A, and the existing term loan B is priced at Libor plus 450 bps with a step-down to Libor plus 425 bps once leverage falls below 3.5 times and a 1.75% Libor floor. The B loan has 101 soft call protection for one year.

When the facility was obtained in August 2010 to fund a distribution, refinance debt and for general corporate purposes, the term loan B was sold at an original issue discount of 981/2.

Leverage is about 4.3 times, about half a turn lower than it was when the 2010 deal was done.

MidContinent Communications is a Minneapolis-based provider of cable television, local and long-distance digital telephone service and high-speed internet access.

Fairmount revises pricing

Moving to the primary, Fairmount Minerals raised pricing on its $1 billion six-year term loan B (B1/BB-) to Libor plus 400 bps from talk of Libor plus 350 bps to 375 bps, and the debt is now being offered at an original issue discount of 99½ instead of at par, while the 1.25% Libor floor and 101 soft call protection for one year were left unchanged, according to a market source.

The source said that the deal was oversubscribed at the original terms but it was thought that it needed "a little tweak to make sure it trades well."

Recommitments were due from lenders at 5 p.m. ET on Wednesday and allocations could go out later this week, the source added.

Barclays, KeyBank, Bank of America Merrill Lynch and PNC are the lead banks on the deal.

Fairmount funding div recap

Proceeds from Fairmount Minerals' new term loan B will be used to fund a $300 million dividend and to repay an existing term loan A and term loan B that were obtained in August 2010 to help fund the company's buyout by American Securities.

At close, the term loan A was sized at $150 million and the term loan B was sized at $550 million. Both were priced at Libor plus 450 bps with a 1.75% Libor floor and were sold at an original issue discount of 981/2. Also, both include a step-down to Libor plus 425 bps when leverage is less than 2.75 times and after receipt of June 30 financials.

The B loan is getting repaid at 101 due to the presence of 101 soft call protection for one year, and the A loan is being repaid at par.

Fairmount leverage down

Fairmount Minerals' pro forma leverage for the dividend recapitalization will be 4.0 times. At closing of the original deal, Fairmount Minerals had $165 million of LTM EBITDA and leverage was about 4.3 times. Now LTM EBITDA is over $250 million, which is why leverage is lower than it was previously.

In addition to getting a term loan B, the company is amending its credit agreement to allow for the new deal and to modify the covenant package, which will include removing the interest coverage ratio and capital expenditures requirement and setting the leverage ratio at 4.75 times throughout the life of the deal, instead of having steps.

Revolver and term loan A lenders are being offered a 25 bps amendment fee.

Fairmount Minerals is a Chardon, Ohio-based producer of industrial sand.

AVG ups spread

AVG Technologies raised pricing on its $235 million five-year term loan B (B1/B+) to Libor plus 600 bps from talk of Libor plus 475 bps to 500 bps and widened the original issue discount to 98 from 99, while leaving the 1.5% Libor floor intact, according to a market source. There is 101 soft call protection for one year.

Talk that pricing was moving into the 600 bps area and the discount was going to 98 has been floating around since early this month, but the official revised terms were not announced until now.

Other changes made to the deal include reducing the restricted payment availability and moving the opening leverage to 3.0 times from 3.5 times previously, with step-downs, the source said, and amortization on the B loan has been set at 10% per annum.

J.P. Morgan is the lead bank on the deal that is targeted to allocate next week.

AVG, a Chelmsford, Mass.-based security software maker, will use the loan proceeds to fund a dividend payment.

Fresenius reworks loan

Fresenius firmed the offer price on its new term loan D at par, compared to initial talk at launch of 99¾ to par, added 101 soft call protection for one year and added a step-down to Libor/Euribor plus 225 bps only after Jan. 1, 2012 when net total leverage is 2.75 times, according to a market source.

Initial pricing on the term loan D due September 2014, which is comprised of a $983.5 million tranche and a €162.5 million tranche, was left unchanged at Libor/Euribor plus 250 bps.

Deutsche Bank is leading the deal that will be used to refinance an existing term loan C due September 2014 priced at Libor/Euribor plus 300 bps with a step-down to Libor plus 275 bps after March 31, 2011 if leverage is 3.5 times or less. There is a 1.5% Libor floor and 101 soft call protection for one year. The loan was completed in March 2010 as part of a refinancing and, at close, it consisted of an about $996 million tranche and a roughly €165 million tranche.

Fresenius is a Bad Homburg, Germany-based provider of products and services for individuals undergoing dialysis.

IMS tweaks structure

IMS Health canceled its proposed $100 million delayed-draw term loan and instead upsized its U.S. term loan by $52.2 million to $1.29 billion and its euro term loan by €20.6 million to €565 million, according to sources.

Pricing on the U.S. term loan remained at Libor plus 325 bps with a 1.25% Libor floor, and pricing on the euro term loan firmed at Euribor plus 350 bps with a 1.5% floor. As before, both are being offered at par and include 101 soft call protection for one year.

The delayed-draw term loan had been talked at Libor plus 325 bps with a 1.25% Libor floor and a par offer price. It had a 50 bps ticking fee starting June 1 and rising through Aug. 15, and was going to be used to fund the acquisition of SDI Health, a privately held health care market insights and analytics firm serving the U.S. market.

IMS repricing loans

IMS Health's U.S. and euro term loans are being used to reprice existing term debt obtained last year to help fund the buyout of the company by TPG Capital and the CPP Investment Board.

At close, pricing on the originally sized $1.25 billion U.S. piece was Libor plus 350 bps and pricing on the originally sized €550 million euro piece was Euribor plus 375 bps. Both term loans include a 1.75% floor and were sold at an original issue discount of 99.

Goldman Sachs and Bank of America Merrill Lynch are the lead banks on the deal.

IMS Health is a Norwalk, Conn.-based provider of market intelligence to the pharmaceutical and health care industries.

Pilot sets guidance

Pilot Travel Centers held a bank meeting on Wednesday to kick off syndication on its proposed $2.6 billion senior secured credit facility, and in connection with the event, price talk was announced, according to a market source.

The $800 million five-year revolver and the $800 million five-year term loan A are being talked at Libor plus 225 bps, with the revolver having a 35 bps unused fee, and the $1 billion seven-year term loan B is being talked at Libor plus 275 bps to 300 bps with a 1% Libor floor, a par offer price and 101 soft call protection for six months, the source said. Pricing on the revolver and the A loan will be based on a leverage grid.

Bank of America Merrill Lynch, Wells Fargo and SunTrust are the lead banks on the deal.

Pilot repaying debt

Proceeds from Pilot Travel Centers' credit facility will be used to refinance existing bank debt and to redeem some bonds.

In 2009, the company got a $2.15 billion senior secured credit facility to fund the acquisition of Flying J. Inc.'s travel plaza business.

At close, the facility consisted of a $500 million revolver, a $500 million term A and an $800 million term loan B, all priced at Libor plus 325 bps with a 2% Libor floor, and a $350 million term loan C. The term loan B had been sold at an original issue discount of 99.

Pilot Travel Centers is a Knoxville, Tenn.-based operator of travel centers.

Aspen Dental talk emerges

Also coming out with guidance was Aspen Dental, as it held a conference call at 2 p.m. ET on Wednesday to launch a $195 million term loan, according to a market source.

A few hours before the call took place, lenders were told that the term loan is being talked at Libor plus 450 bps with a 1.5% Libor floor, a par offer price and 101 soft call protection until Oct. 6, 2011, the source said.

Proceeds will be used to reprice an existing $195 million term loan obtained in October 2010 for the company's buyout by Leonard Green & Partners LP at pricing of Libor plus 600 bps with a 1.75% Libor floor. The loan was sold at a discount of 98 and includes 101 soft call protection for one year, which lenders are receiving with this repricing.

All other terms on the repriced deal are identical to the existing credit agreement.

UBS is leading the loan for the East Syracuse, N.Y.-based provider of denture and dental care services.

Chemtura pricing

Chemtura launched its $395 million term loan B with a call on Wednesday at talk of Libor plus 300 bps with a 1% Libor floor, a par offer price and 101 soft call protection for six months, according to a market source.

Bank of America Merrill Lynch and Citigroup are the lead banks on the deal that will be used to refinance the company's exit term loan and for general corporate purposes.

The $295 million exit term loan obtained in August 2010 is priced at Libor plus 400 bps with a 1.5% Libor floor and includes 101 call protection for one year.

Chemtura is a Middlebury, Conn.-based manufacturer and marketer of specialty chemicals, agrochemicals and pool, spa and home care products.

TASC floats guidance

Yet another deal to come out with price talk in connection with a conference call launch was TASC, with its $575 million term loan B presented at Libor plus 325 bps with a 1.25% Libor floor, an original issue discount of 99½ and 101 soft call protection for six months, according to a market source.

Barclays, Deutsche Bank, KKR and RBC are leading the $675 million credit facility, which also provides for a $100 million revolver and will be used to refinance existing debt.

In December 2009, the company got a $690 million senior secured credit facility for its buyout by General Atlantic LLC and Kohlberg Kravis Roberts & Co. that consisted of a $100 million revolver and a $200 million term A, both priced at Libor plus 350 bps with a 2% Libor floor, and a $390 million term B priced at Libor plus 375 bps with a 2% Libor floor. The A loan and the B loan were sold at an original issue discount of 99 and the revolver was sold at 98.

TASC is a Chantilly, Va.-based provider of advanced systems engineering and technical assistance to the defense, intelligence, federal and homeland security markets.

Douglas discloses talk

Douglas Dynamics Inc. launched its credit facility with a bank meeting on Wednesday and released talk on the $125 million seven-year covenant-light term loan B (B1/BB) at Libor plus 425 bps with a 1.5% Libor floor and an original issue discount of 99, and on the $70 million asset-based revolver at Libor plus 225 bps, according to a market source.

J.P. Morgan is the lead bank on the $195 million deal that will be used to refinance existing debt.

Douglas Dynamics is a Milwaukee-based designer, manufacturer and seller of snow and ice control equipment for light trucks.

Earthbound Farm launches

As expected, Earthbound Farm launched its $225 million term loan B on Wednesday with talk of Libor plus 400 bps to 425 bps with a 1.5% Libor floor, a par offer price and 101 soft call protection for one year, according to a market source.

RBC Capital Markets is the lead bank on the deal that will be used to reprice the company's existing term loan B.

Late last year, as part of a dividend recapitalization, the company wrapped syndication of its $225 million term loan B at pricing of Libor plus 500 bps with a 1.75% Libor floor, and it was sold at a discount of 981/2.

Earthbound Farm is a San Juan Bautista, Calif.-based organic food company.

HHI holds meeting

HHI Group Holdings held its bank meeting on Wednesday to launch a $325 million term loan B that came at previously outlined talk of Libor plus 550 bps with a 1.5% Libor floor, an original issue discount of 99½ and 101 soft call protection for one year, according to a market source.

Bank of America Merrill Lynch, Goldman Sachs and Credit Suisse are the lead banks on the deal that will be used to refinance existing debt and fund a dividend.

In early 2010 as part of a dividend recapitalization, the company got a $200 million term loan B priced at Libor plus 750 bps with a 3% Libor floor that was sold at an original issue discount of 97. Then, later in the year, the company did a $30 million term loan add-on that was also used for a dividend.

HHI is a Royal Oak, Mich.-based manufacturer of forged parts and wheel bearings and a supplier of powdered metal engine and transmission components.

Farley's readies deal

Farley's & Sathers Candy has set a bank meeting for Monday to launch a proposed $245 million credit facility that consists of a $60 million five-year revolver and a $185 million seven-year term loan B, according to a market source.

Bank of America Merrill Lynch, GE Capital Markets and RBS Capital Markets are the lead banks on the deal.

Proceeds will be used to refinance existing debt.

Farley's & Sathers is a Round Lake, Minn.-based manufacturer and distributor of confectionary and gum products.

Harron coming soon

Harron Communications is planning on holding a bank meeting on Tuesday to launch a proposed $600 million credit facility that is being led by SunTrust, Wells Fargo and Credit Agricole, according to a market source.

The facility consists of a $100 million revolver, a $200 million term loan A and a $300 million term loan B that is talked at Libor plus 325 bps with a 1.25% Libor floor, an original issue discount of 99½ and 101 soft call protection for one year, the source said.

Proceeds will be used to refinance existing debt.

Harron is a Frazer, Pa.-based provider of digital television, high speed internet, digital phone and business services.

Surgery timing surfaces

Surgery Center has set a bank meeting for Tuesday to launch its proposed senior secured credit facility, according to a market source, which, based on filings with the SEC is expected to be sized at $250 million, comprised of a $230 million 53/4-year term loan and a $20 million five-year revolver.

The filings outlined pricing on the entire facility at Libor plus 525 bps with a 1.75% Libor floor and said that the revolver will have a 50 bps unused fee.

Jefferies is the lead bank on the deal that will be used, along with $53.8 million of mezzanine financing from THL Credit Inc., to fund the acquisition of NovaMed Inc. for $13.25 per share in cash.

Surgery Partners is a Tampa, Fla.-based acquirer, developer and manager of free-standing ambulatory surgical centers. NovaMed is a Chicago-based operator, developer and acquirer of ambulatory surgery centers.

Calpine closes

In other news, Calpine Corp., a Houston-based power company, closed on its $1.3 billion seven-year senior secured covenant-light term loan B that is priced at Libor plus 325 bps with a 1.25% Libor floor, according to a news release. The loan was sold at par and includes 101 soft call protection for one year.

Morgan Stanley, Goldman Sachs, Citigroup, Credit Suisse and Deutsche Bank acted as the bookrunners on the deal that was used to refinance a $1.3 billion term loan obtained by the company's subsidiary New Development Holdings LLC in June 2010 to fund the purchase of power generation assets from Pepco Holdings Inc. The New Development $100 million revolver was also terminated in connection with the refinancing.

Pricing on the 2010 term loan, which was not covenant-light, was Libor plus 550 bps with a 1.5% Libor floor, and it was sold at an original issue discount of 98. The tranche included 101 soft call protection for one year.

Gentiva wraps refi

Gentiva Health Services Inc., an Atlanta-based home health care provider, closed on its $852 million senior credit facility comprised of a $125 million revolver due Aug. 17, 2015, a $180 million term loan A due Aug. 17, 2015 and a $547 million term loan B due Aug. 17, 2016.

Pricing on the revolver is Libor plus 500 bps, pricing on the term loan A is Libor plus 325 bps with a 1.25% Libor floor, and pricing on the term loan B is Libor plus 350 bps with a 1.25% Libor floor. The B loan was sold at par and includes 101 soft call protection for six months.

Bank of America Merrill Lynch, GE Capital, Barclays Bank and SunTrust acted as the lead banks on the deal that was used to refinance/reprice an existing bank deal that was obtained in August 2010 for the acquisition of Odyssey HealthCare Inc.

The existing revolver, term loan A and term loan B were priced at Libor plus 500 bps, with the term loans having a 1.75% Libor floor. The A loan was issued at an original issue discount of 98, and the B loan sold at a discount of 96 and had soft call protection of 102 in year one and 101 in year two.

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