Dana, Dole, Burlington tweaked; Cebridge nets orders; TLC, Corel, Packaging set talk

By Sara Rosenberg

New York, April 6 - A number of deals came out with changes to their credit facilities Thursday, including Dana Corp. and Dole Food Co. Inc., which both lowered pricing on their institutional loan debt, and Burlington Coat Factory Warehouse Corp., which upsized its term loan while firming up pricing at the low end of talk.

Also in the primary, Cebridge Connections Inc. received billions in orders within hours of launching to investors Thursday, TLC Health Care Services Inc. and Corel Corp. released price talk on their credit facilities as they too launched deals during the session, and Packaging Dynamics Corp. came out with price talk on its recently launched deal as ratings emerged.

In secondary happenings, Audatex, Venetian Macau Ltd. and National Renal Institutes Inc. all freed for trading, Allied Waste Industries Inc. headed higher as its repricing request was modified and Spectrum Brands Inc. headed lower on revised earnings guidance, rating downgrades and assumptions of future covenant relief requests.

Dana reverse flexed pricing on its $700 million DIP term loan Thursday by 50 basis points due to strong investor interest, according to a market source.

The term loan is now priced with an interest rate of Libor plus 225 basis points, down from original price talk at launch of Libor plus 275 basis points, the source said.

Dana's $750 million asset-based revolver was left unchanged in terms of pricing with the spread set at Libor plus 225 basis points and the unused fee set at 37.5 basis points.

Citigroup, Bank of America and JPMorgan are the lead banks on the $1.45 billion 24-month debtor-in-possession facility (B3/BB-), with Citi the left lead.

Originally the DIP was supposed to have a tenor of 18 months but was recently amended to extend the term to 24 months.

Dana already borrowed the $700 million DIP term loan on March 30 and used the proceeds to refinance its pre-bankruptcy revolver and to pay other pre-bankruptcy obligations, as well as for working capital and general corporate expenses.

In connection with this U.S. DIP transaction, Dana Canada is getting a $100 million Canadian revolver with an interest rate of Libor plus 225 basis points.

Dana is a Toledo, Ohio, engineer, manufacturer, supplier and distributor of systems and components for vehicle manufacturers.

Dole cuts spread

Also on the flex front, Dole Food's reduced pricing on its term loan B and pre-funded letter-of-credit facility Thursday by 25 basis points, according to a market source.

The $875 million covenant-light term loan B (Ba3/B+) and the $100 million pre-funded letter-of-credit facility (Ba3/B+) were both reverse flexed to Libor plus 175 basis points from original price talk at launch of Libor plus 200 basis points, the source said.

Dole's $1.3 billion credit facility also contains a $325 million asset-based revolver with an interest rate of Libor plus 150 basis points - unchanged since launch, the source added.

Deutsche Bank is the lead on the deal that will be used to refinance existing bank debt.

Dole is a Westlake Village, Calif., producer and marketer of fresh fruit, fresh vegetables and fresh-cut flowers.

Burlington upsizes

Burlington increased the size of its term loan B (B2/B/B-), firmed up pricing on the term loan at the tight end of talk and reverse flexed pricing on the first-in, last-out revolver tranche A+, according to a market source.

The term loan B is now sized at $900 million, up from $775 million as the company decided to downsize its bond offering to $375 million from $500 million to reduce cost of capital, and pricing firmed up at Libor plus 225 basis points, the low end of original price talk of Libor plus 225 to 250 basis points, the source said.

By the late-March commitment deadline, the term loan B was around two times oversubscribed, so some investors had already been expecting pricing to end up at the tight side of talk based on the amount of demand received.

In addition, the company lowered pricing on its $65 million first-in, last-out revolver tranche A+ (NA/NA/BB-) to Libor plus 275 basis points from original price talk at launch of Libor plus 325 basis points, the source said.

Pricing on the company's $735 million ABL revolver tranche (NA/NA/BB-) was left unchanged at Libor plus 150 basis points.

Bear Stearns and Bank of America are the joint lead arrangers and joint bookrunners on the $1.575 billion credit facility.

Proceeds from the credit facility and the bonds will be used to help fund Bain Capital Partners LLC's leveraged buyout of the Burlington, N.J., retailer of branded apparel for $45.50 per share in cash, or $2.06 billion.

Cebridge gets good reception

Cebridge Connections had more than $2 billion in orders toward its $2.48 billion credit facility by late-day Thursday, as the company held a bank meeting earlier in the session to officially kick off syndication on the deal, according to a market source.

The facility consists of a $200 million revolver, a $2 billion term loan B and a $280 million interim term loan.

Price talk has yet to emerge on the transaction; however, investors are expecting the term loan B to price somewhere between Charter Communications Inc.'s term loan that's talked at Libor plus 275 basis points and Mediacom's term loans that are talked at Libor plus 175 basis points, the source said.

Goldman Sachs and Credit Suisse are joint lead arrangers on the Cebridge credit facility, with Goldman the left lead.

Proceeds will be used to help fund the purchase of Cox Communications Inc.'s cable television systems.

GS Capital Partners and Oaktree Capital Management LLC are the majority investors in Cebridge and the primary equity partners in this transaction.

The acquisition, which was announced in 2005, is expected to close in the second quarter.

Cebridge is a St. Louis-based provider of cable television and internet access.

TLC talk emerges

TLC Health Care Services announced price talk on its $190 million senior secured credit facility as the company held a bank meeting during Thursday's session, and syndication seems to off to a good start with the second-lien term loan tranche already oversubscribed, according to a market source.

The $20 million five-year revolver (B2/B-) and the $120 million six-year first-lien term loan (B2/B-) were launched with opening talk of Libor plus 300 basis points, the source said.

And, the $50 million seven-year second-lien term loan (Caa1/CCC) was launched with opening talk of Libor plus 700 basis points and call protection of 102 in year one and 101 in year two, the source continued.

This second-lien term loan was presold to investors prior to the bank meeting, leading to oversubscription by the time of the launch, the source added.

UBS and Bank of America are the joint lead arrangers on the deal that will be used to repay existing debt.

TLC Health Care is a Lake Success, N.Y.-based provider of home health care services.

Corel sets talk

Corel announced price talk in the Libor plus 325 basis points area on both its $90 million six-year term loan B and its $75 million five-year revolver, as it too held a bank meeting Thursday to officially launch syndication on its new deal, according to a market source.

Morgan Stanley is the lead arranger and bookrunner on the $165 million senior secured credit facility (B3/B).

Corel is getting the new credit facility in connection with its initial public offering of common stock. And, in conjunction with the IPO, the company is acquiring WinZip, a provider of compression utility software, from Vector Capital - Corel's current controlling shareholder.

Proceeds from the new credit facility, along with an estimated $82.9 million of IPO proceeds, will be used to repay the company's existing credit facility debt, repay existing WinZip debt, and for general corporate purposes, which may include acquisitions.

The revolver is expected to be undrawn at closing.

Corel is an Ottawa, Ont., packaged software company.

Packaging Dynamics spread guidance

Price talk also surfaced on Packaging Dynamics' credit facility on Thursday morning as a term loan rating of Ba3 was announced by Moody's Investors Service, joining the BB- rating that Standard & Poor's assigned to the term loan on Wednesday, according to a market source.

With the finalization of these ratings, the company's $90 million covenant-light term loan is being marketed to investors with initial price talk of Libor plus 225 to 250 basis points, the source said.

Meanwhile, the company's $125 million asset-backed revolver, which is unrated by the agencies, is being marketed to investors with opening price talk of Libor plus 150 basis points, the source added.

Deutsche Bank and Jefferies are the lead banks on the $215 million credit facility that was launched via a bank meeting on Wednesday, with Deutsche the left lead.

Proceeds from the new deal will be used to help fund Kohlberg & Co.'s acquisition of Packaging Dynamics.

Under the acquisition agreement, each outstanding share of Packaging Dynamics' common stock will be purchased for $14 in cash by a wholly owned subsidiary of Kohlberg affiliate Thilmany LLC.

The transaction is valued at about $268 million, including the assumption or refinancing of the company's outstanding debt as of Dec. 31, 2005.

The combined Packaging Dynamics and Thilmany business will have annual sales of about $750 million, making it one of the 10 largest flexible packaging companies in the United States.

Closing on the acquisition is expected to be completed during the second quarter, subject to various customary conditions, including approval of the transaction by the company's stockholders and the expiration of the applicable waiting period under the Hart-Scott-Rodino Act.

Packaging Dynamics is based in Chicago, while Thilmany is based in Kaukauna, Wis.

Audatex breaks

Switching to the secondary, Audatex allocated its credit facility Thursday, with the $240 million term loan B (B1/B+) freeing up for trading at 101¼ bid, 101¾ offered where it remained throughout the session, according to a trader.

The term loan B is priced with an interest rate of Libor plus 225 basis points and contains a step down to Libor plus 200 basis points under certain circumstances.

Audatex's facility also contains a €220 million term loan B (B1/B+) priced at Libor plus 225 basis points with a step down to Libor plus 200 basis points, a €165 million second-lien term loan (B3/B-) priced at Libor plus 550 basis points with call protection of 102 in year one and 101 in year two, a €80 million holdco PIK for life mezzanine tranche at Euribor plus 900 basis points with call protection of 102 in year one and 101 in year two, and a $50 million revolver (B1/B+).

Goldman Sachs and Citigroup are joint lead arrangers on the deal, with Goldman the left lead.

Proceeds from the new credit facility will be used to help fund Solera Inc.'s acquisition of Automatic Data Processing Inc.'s Claims Services Group, which is being renamed as Audatex.

Under the purchase agreement, Solera is buying Audatex, a provider of automotive claims solutions, for $975 million in cash. Solera was formed by industry veteran Tony Aquila, in partnership with GTCR Golder Rauner.

Solera is a San Diego-based consulting, outsourced services and technology solutions company focused on the auto physical damage insurance claims processing industry.

Venetian Macau frees to trade

Also hitting the secondary was Venetian Macau's credit facility, with the $1.2 billion funded seven-year term loan quoted at 101½ bid, 102 offered and the $700 million delayed-draw six-year term loan quoted at par ½ bid, 101 offered, according to a trader.

Both the funded and the delayed-draw term loans are priced with an interest rate of Libor plus 275 basis points.

Venetian Macau's $2.5 billion senior secured credit facility (B1/BB-) also contains a $500 million five-year revolver and a $100 million equivalent local currency five-year term loan, with these tranches priced at Libor plus 275 basis points as well.

Goldman Sachs, Lehman and Merrill Lynch are the lead banks on the deal, with Goldman the left lead.

Proceeds from the deal will be used to fund design, development, construction and pre-opening costs for the company's development projects in Macao, including The Venetian Macao Resort-Hotel-Casino and other projects on the Cotai Strip, and to pay related fees and expenses.

Closing is expected to take place in the first quarter of 2006.

Venetian Macau is a subsidiary of Las Vegas Sands Corp, a Las Vegas-based hotel, gaming, resort and exhibition/convention company.

National Renal frees atop 101

National Renal's credit facility also broke for trading during market hours, with the $250 million term loan B quoted at 101 bid, 101½ offered, according to a trader.

The term loan B is priced with an interest rate of Libor plus 225 basis points and contains 101 soft call protection. During syndication, the term loan was upsized from $218 million and pricing was reduced from Libor plus 300 basis points, with the addition of the soft call.

National Renal's $300 million senior credit facility also contains a $50 million revolver with an interest rate of Libor plus 300 basis points and a 50 basis point commitment fee. During syndication, the revolver was upsized from $40 million.

RBC Capital Markets, Royal Bank of Scotland and Aries Management are the lead banks on the deal, with RBC the left lead.

Proceeds will be used to help fund the acquisition of more than 100 dialysis clinics from Fresenius Medical Care Holdings Inc. and Renal Care Group.

National Renal is a wholly owned subsidiary of Nashville, Tenn.-based DSI Holding Co. Inc., which is currently being invested in by equity firm Centre Partners.

Allied Waste trades up

Allied Waste's institutional bank debt headed higher in trading as the company reworked its repricing request so as to make it more palatable to lenders, according to a trader.

The company's term loan B and institutional letter-of-credit facility, which trade as a strip, closed the session quoted at par 1/8 bid, par 7/8 offered, up from Wednesday's levels of par bid, par ½ offered in trading, the trader said.

After the close Wednesday, news hit the market that the Scottsdale, Ariz., waste services company has changed its repricing request to a 25 basis point cut in spread as opposed to the original 50 basis point proposal.

Under the latest proposal, the term loan B and letter-of-credit facility will be repriced to Libor plus 175 basis points from current pricing of Libor plus 200 basis points. When the repricing amendment first launched, the company was looking to bring pricing down to Libor plus 150 basis points.

There are some rumors going around that under the new proposal, the institutional bank debt will have the ability to step down to Libor plus 150 basis points under certain circumstances; however, this has yet to be confirmed, the trader said.

Since the repricing was first announced, market talk was that investor resistance was being felt and the proposal would need to be a bit juicier for lenders to get on board, which is what this recent change is intended to do.

And, with Thursday's rise in trading levels, the assumption is that lenders are a bit more pleased and more comfortable with the most recently proposed plan when compared to the original plan, the trader added.

Spectrum hit by lowered guidance

Spectrum Brands saw its bank debt head to lower ground as earnings guidance for the second quarter was revised significantly lower because of challenges in the battery business, leading to a downgrade by Standard & Poor's and speculation on covenant issues, according to a trader.

The bank debt dropped to par 5/8 bid, 101 1/8 offered from previous levels of 101¼ bid, 101¾ offered, the trader said.

On Thursday, the company said that it now expects second quarter fully diluted earnings per share in the range of $0.03 to $0.06 and pro forma diluted earnings per share in the range of $0.00 to $0.05. By comparison, in January, the company had offered guidance for second quarter pro forma fully diluted earnings per share in the range of $0.35 to $0.40.

Following this announcement, S&P lowered all of its ratings on Spectrum Brands, including the senior secured bank loan rating to B- from B, the senior subordinated debt rating to CCC from CCC+ and the corporate credit rating to B- from B.

In addition, Spectrum Brands revealed that it plans on entering into discussions with its lenders due to the anticipated lower-than-expected second-quarter results.

Although no specifics on these lender discussions were available, some market participants believe that the company will likely be looking for some sort of covenant relief, buyside and sellside sources told Prospect News.

Spectrum Brands is an Atlanta-based consumer products company and a supplier of batteries and portable lighting, lawn and garden care products, specialty pet supplies, shaving and grooming and personal care products, and household insecticides.

GM bounces back

General Motors Corp.'s revolver rebounded during Thursday's market hours as better buying interest was seen in the name, according to a trader.

The Detroit-based automotive company's revolver closed out the day quoted in the 96 bid, 97 offered context, up from Wednesday's levels of 94½ bid, 95½ offered, the trader said. By comparison, on Tuesday, the revolver was being quoted in the 95½ bid, 97 offered area.

The bank debt has been hopping around recently on continuous rumors that a refinancing may be soon to come and on the recent announcement that the company has reached an agreement to sell its 51% stake in its financing arm General Motors Acceptance Corp.

© 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.