New HCA B-2 continues trading higher; Lamar Media talks loan; Skilled Healthcare cuts pricing

By Paul A. Harris

St. Louis, April 6 - The leveraged loan market continued to rally, riding on both technical and fundamental tailwinds, a loan trader told Prospect News Tuesday afternoon.

The newly minted LCDX 14 loan index gained ¼ point on the day, and was trading at 97½ bid at mid-afternoon on the East Coast.

Meanwhile, the older vintage LCDX 13 index was 1/16 point higher at 104¾ bid.

The spread differential is about 50 bps, with the LCDX 14 the tighter of the two, the trader said.

The new extended-maturity HCA Inc. term loan B-2 was up ¾ point to 99¼ bid, improved from Monday's close of 98½ bid.

The Nashville-based hospital company extended the maturity on $2 billion of its term loan B by 3.5 years on Monday.

The new B-2 tranche, which is priced at Libor plus 325 bps, will now mature in March 2017. The former maturity was November 2013.

Meanwhile other recent issues continue to march higher, the trader said.

The new International Lease Finance Corp. term loan, which priced 98 in March, was at 102 bid, on Tuesday, the trader said.

Reynolds and Reynolds talk emerges

In the primary market, Reynolds and Reynolds Co. set price talk for its $1.82 billion seven-year term loan at Libor plus 350 bps to 375 bps, with a 1.75% Libor floor.

The $1.895 billion credit facility also features a $75 million revolver.

Deutsche Bank, Bank of America and Credit Suisse are the lead banks on the deal, with Deutsche the left lead.

Proceeds will be used to refinance existing debt.

Lamar Media sets price talk

Meanwhile Lamar Media Corp. set price talk for its $1.125 billion credit facility.

The $575 million term loan B is talked with a Libor plus 325 bps coupon at 99.50 with a 1.5% Libor floor. The $250 million revolver and $300 million term loan A are talked at Libor plus 300 bps.

JPMorgan, Wells Fargo and SunTrust are the lead banks on the deal.

Proceeds will be used to refinance existing debt.

Skilled Healthcare cuts pricing

Skilled Healthcare Group Inc. cut pricing on its $330 million term loan on Tuesday, according to a market source.

The Libor floor was decreased to 1.5% from 1.75%. Meanwhile the original issue discount was trimmed: the deal is now talked to price at 99.5, up from previous talk of 99.

The coupon is expected to come at a 375 basis points spread, but will step down to Libor plus 350 basis points when leverage coverage decreases to 3.25 times.

The $430 million credit facility also includes a $100 million revolver.

Credit Suisse, Barclays, JPMorgan and Bank of America are the lead banks on the deal, with Credit Suisse the left lead.

Proceeds will be used to refinance the company's existing senior secured credit facility that consists of a $260 million term loan and a $135 million revolver.

Strong demand

There is plenty of cash to deal with the growing bank loan calendar, a loan trader remarked on Tuesday.

The books are strong for the CF Industries Holdings Inc. $2.3 billion deal, the source added.

Morgan Stanley and the Bank of Tokyo-Mitsubishi UFJ are the lead banks on that deal.

Also, investors are being taken out of loan paper as issuers selectively refinance bank loans in a red hot high-yield bond market, the trader said.

Meanwhile CLOs need to reinvest.

"As a result you are starting to see smaller and smaller original issue discounts and lower Libor floors, which are signs that we are coming to the height of the leveraged markets," the source remarked.

RadNet closes

RadNet, Inc. said it completed on Tuesday a new $385 million credit facility (Ba3/B+) as part of a debt refinancing plan.

The company obtained a $285 million six-year term loan B priced at Libor plus 375 bps with a 2% Libor floor and brought to market with an original issue discount of 99. The loan has a soft call at 101.

RadNet's facility also includes a $100 million five-year revolver at Libor plus 375 bps, also with a 2% Libor floor and an upfront fee of 98.

Barclays Capital, GE Capital Markets, Inc., Deutsche Bank Securities Inc. and RBC Capital Markets were joint lead arrangers and joint bookrunners, General Electric Capital Corp. and Deutsche Bank Securities Inc. were syndication agents, RBC Capital Markets was documentation agent and Barclays Bank plc was administrative agent and collateral agent.

The Los Angeles-based provider of diagnostic imaging services also sold $200 million 10 3/8% senior notes due 2018 to yield 10 5/8%.

Proceeds from the new financings were used to refinance the company's previous term loan B, second lien term loan and revolver and to fund its acquisitions of Truxtun Medical Group in Bakersfield, Calif., and the New Jersey operating subsidiary of Health Diagnostics currently under letters of intent, to add cash to its balance sheet and to pay fees and expenses.

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