Psychiatric Solutions up on buyout; Capella, Calpine rise; U.S. Renal, NextMedia tweak deals

By Sara Rosenberg

New York, May 17 - Psychiatric Solutions Inc.'s term loan B gained some ground in trading in an otherwise softer secondary market on Monday as news emerged that the company is being acquired by Universal Health Services Inc.

Also in trading, Capella Healthcare Inc.'s second-lien term loan and Calpine Corp.'s exit term loan moved higher as both companies plan to repay bank debt with bond proceeds.

Over in the primary market, U.S. Renal Care Inc. made some changes to its credit facility, increasing both the size of the revolver and the term loan, and firming pricing at the low end of talk, and NextMedia Operating Inc. lowered pricing and the original issue discount on its term loan.

Additionally, Calpine New Development Holdings, a subsidiary of Calpine Corp.. came out with price talk on its term loan, and Triumph Group Inc.'s term loan has been met with a lot of demand since its launch and is already heavily oversubscribed.

Psychiatric Solutions rises

Psychiatric Solutions' term loan B was stronger as the company announced that it is being acquired by Universal Health Services for $33.75 per share in cash, or about $2 billion, according to traders.

Including the assumption of $1.1 billion in Psychiatric Solutions net debt, the total transaction consideration is approximately $3.1 billion.

The 2009 combined revenue of the two companies was more than $7 billion and the combined EBITDA was roughly $1.1 billion.

Following the news, Psychiatric Solutions' term loan was quoted at 98½ bid, 99½ offered, up from 97¾ bid, 98¾ offered, traders said.

Universal Health gets debt commitment

Universal Health has received a $4.15 billion credit facility commitment to help fund its acquisition of Psychiatric Solutions, according to a company presentation.

JPMorgan and Deutsche Bank are the lead banks on the deal that is expected to be comprised of $1.3 billion in revolver and term loan A financing, with the remainder being term loan B.

Pro forma total debt to EBITDA is 3.8 times, compared to Universal Health's standalone debt to EBITDA of 1.2 times.

Closing on the transaction is expected to take place in the fourth quarter, subject to customary conditions, including regulatory approvals and clearance under Hart-Scott-Rodino Act, as well as approval by Psychiatric Solutions' shareholders.

Psychiatric Solutions is a Franklin, Tenn.-based operator of owned or leased freestanding psychiatric inpatient facilities. Universal Health is a King of Prussia, Pa.-based owner and operator of acute care hospitals and behavioral health care facilities and schools.

Capella Healthcare second-lien gains

Capella Healthcare's second-lien term loan headed higher on Monday after the company revealed plans to repay bank debt using proceeds from a $500 million notes offering, according to a trader.

The second-lien term loan was quoted at 103¼ bid, 104¼ offered, up from par bid, 102 offered, the trader said.

Meanwhile, the company's first-lien term loan was unchanged on the day at 99 bid, par offered, the trader added.

Capella is a Brentwood, Tenn.-based operator of community hospitals.

Calpine trades up

Calpine's exit term loan was also better on Monday on word of a planned paydown, according to traders.

The term loan was quoted by one trader at 95 bid, 95¼ offered, up from 94 5/8 bid, 95 offered, and by a second trader at 94½ bid, 95¼ offered, up from 93½ bid, 95 offered.

Early on in the day, Calpine priced $400 million of senior secured notes at par to yield 8%, and proceeds from this offering will be used to repay a portion of the company's term loan.

Calpine is a Houston-based power generation company.

U.S. Renal ups loan size

Switching to the primary, U.S. Renal Care revised the size of its credit facility (B1/B+) by increasing the six-year term loan to $132.5 million from $125 million and the five-year revolver to $40 million from $30 million, according to a market source.

In addition, pricing on the now $172.5 million facility, up from $155 million, finalized at Libor plus 450 basis points, the tight end of the original Libor plus 450 bps to 475 bps talk.

Both tranches still include a 1.75% Libor floor and are being sold at an original issue discount of 99, the source said.

Financial covenants include a maximum total leverage ratio, a minimum interest coverage ratio and a minimum fixed-charge coverage ratio.

RBC is the lead bank on the deal.

U.S. Renal trims mezzanine

As a result of the term loan upsizing, U.S. Renal downsized its mezzanine financing to $40 million from $47.5 million, while leaving pricing at 11¼% cash plus 2% is PIK, the source continued.

Proceeds from the credit facility and the mezzanine debt will be used to help fund the acquisition of Dialysis Corp. of America Inc. in a transaction valued at about $112 million. U.S. Renal is tendering for all of the outstanding common shares of Dialysis Corp. for $11.25 per share in cash. That tender will be followed by a merger to acquire all remaining outstanding shares at the same cash price paid in the tender offer.

Last Thursday, U.S. Renal extended the cash tender offer for Dialysis Corp. to June 1 from May 19. The company explained that it expects to meet the conditions of its debt commitment letter on May 24 and, to comply with applicable rules of the Securities and Exchange Commission, the offer was extended so that five business days remain in the offer following the satisfaction of the financing condition.

U.S. Renal is a Plano, Texas-based provider of outpatient dialysis services. Dialysis Corp. is a Linthicum, Md.-based provider of outpatient kidney dialysis centers.

NextMedia revises pricing

NextMedia reverse flexed pricing on its $135 million six-year term loan (B3/B+) to Libor plus 625 bps from Libor plus 700 bps and cut the original issue discount to 99 from 98, according to a market source.

The 2% Libor floor was left unchanged.

Credit Suisse and Bank of America are the lead banks on the deal, which also includes a $10 million first-out revolver (Ba3) that is not being syndicated.

Proceeds will be used to help settle existing claims in connection with the company's emergence from Chapter 11.

NextMedia is a Greenwood Village, Colo.-based radio station operator.

Calpine New Development sets talk

Calpine New Development, a subsidiary of Calpine Corp., held a bank meeting on Monday to kick off syndication on its proposed $1.3 billion amortizing seven-year term loan, and in connection with the launch, price talk emerged, according to sources.

The loan is being talked at Libor plus 350 bps if ratings are four-Bs and Libor plus 375 bps if ratings are three-Bs, with a 1.5% Libor floor and an original issue discount of 98, sources said.

Credit Suisse, Citigroup and Deutsche Bank are the lead banks on the $1.4 billion credit facility, which also includes a $100 million revolver.

Since the new debt is at a subsidiary, Calpine does not need to obtain an amendment from existing term loan holders to complete the transaction.

The company previously explained that the arrangement also allows it to take advantage of the lower cost of capital of subsidiary-level financing without sacrificing flexibility.

Calpine buying Pepco assets

Proceeds from Calpine's credit facility, along with $535 million of corporate cash, will be used to help fund the acquisition of 4,490 MW of power generation assets from Pepco Holdings Inc. for $1.65 billion plus adjustments.

Pro forma net debt to adjusted EBITDA as of Dec. 31 is 4.8 times.

And, pro forma adjusted EBITDA for 2010 is estimated between $1.625 billion and $1.725 billion, while for 2011, it is estimated between $1.685 billion and $1.885 billion.

Closing on the acquisition is expected to take place by June 30, subject to customary conditions, approval from the Federal Energy Regulatory Commission and antitrust review under the Hart-Scott-Rodino Act. No shareholder approval is required.

Calpine is a Houston-based power generation company.

Triumph Group well-met

Triumph Group's $300 million senior secured term loan B (Baa3) is "way oversubscribed already" as investors have jumped on the deal since it launched on May 6, according to a market source.

The term loan B is being talked at Libor plus 325 bps with a 1.5% Libor floor and an original issue discount in the 99 area.

RBC is the lead bank on the deal that will be used to help fund the acquisition of Vought Aircraft Industries Inc. from the Carlyle Group for cash and stock consideration of $1.44 billion, including the retirement of Vought debt. The purchase consideration to Vought shareholders includes about 7.5 million shares and $525 million of cash.

Closing on the acquisition is expected to take place on July 1, subject to normal regulatory approval and Triumph shareholder approval, which will be sought at a special meeting on May 28.

After closing, the acquired business will operate as Triumph Aerostructures-Vought Aircraft Division LLC.

Triumph Group gets revolver

As was already reported, subject to the Vought acquisition closing, Triumph Group has entered into an agreement for a $535 million revolving credit facility.

PNC acted as the lead arranger and administrative agent on the deal that was completed on May 10.

The revolver will be available to partially fund the Vought acquisition and refinance any existing bank debt.

Triumph is a Wayne, Pa.-based designer, engineer, manufacturer and repairer of aircraft components and accessories. Vought is a Dallas-based manufacturer of aerostructures for commercial, military and business jet aircraft.

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