99 Cents term loan falls with poor earnings; near-term primary calendar continues to build

By Sara Rosenberg

New York, Sept. 11 – 99 Cents Only Stores LLC saw its term loan plummet in the secondary market on Friday following the release of disappointing second quarter results that showed a year-over-year decline in earnings and adjusted EBITDA.

Meanwhile, in the primary market, HelpSystems LLC and Novetta came out with bank meeting dates and structures on their buyout deals, and timing emerged on the launch of credit facilities from Quanex Building Products Corp., Idera Inc. and NN Inc.

99 Cents retreats

99 Cents Only Stores’ term loan fell in trading on Friday after the company released “very weak numbers” results for its second quarter of fiscal 2016 and held a “less than inspiring conference call”, according to a trader.

The term loan was quoted at 86 bid, 88 offered, down from 95 bid, 96 offered, the trader said.

For the quarter, the company reported a net loss of $78.1 million, compared to net income of $2 million for the second quarter of fiscal 2015.

Also, adjusted EBITDA for the quarter was $6.9 million, versus $36.3 million in the comparable prior year period, and net sales were $488.5 million, compared to $458.2 million in the second quarter last year.

“Our results this quarter remain disappointing as the significant changes we made last year to our stores and our merchandising and replenishment systems have taken time to drive improvements in our competitive positioning. To more immediately address our performance, we are actively working to more effectively manage our inventory and improve product assortment, while continuing to enhance customer service,” said Andrew Giancamilli, interim president and chief executive officer, in a news release.

99 Cents is a City of Commerce, Calif.-based operator of extreme-value retail stores.

HelpSystems details surface

Over in the primary, HelpSystems emerged with plans to hold a bank meeting at 2 p.m. ET in New York on Wednesday to launch a $465 million credit facility to help fund its buyout of the company by H.I.G. Capital from Summit Partners, a market source remarked.

The facility consists of a $35 million revolver, a $300 million seven-year first-lien term loan talked with a 1% Libor floor and 101 soft call protection for six months, and a $130 million eight-year second-lien term loan talked with a 1% Libor floor and call protection of 102 in year one and 101 in year two, the source continued.

Commitments are due at 5 p.m. ET on Sep. 29.

Credit Suisse Securities (USA) LLC and Antares Capital are leading the deal.

Previously, it was known that the company would be getting a new credit facility with the buyout and leads were announced, but timing and structure were unavailable.

Closing on the buyout is subject to regulatory and antitrust approval.

HelpSystems is an Eden Prairie, Minn.-based provider of system & network management, business intelligence, and security & compliance solutions.

Novetta timing, structure

Novetta set a bank meeting for Wednesday to launch a $325 million credit facility, according to a market source.

The facility consists of a $40 million revolver, a $200 million first-lien term loan and an $85 million second-lien term loan, the source said.

Jefferies Finance LLC and Societe Generale are leading the deal that will be used with equity to fund the buyout of the company by The Carlyle Group from Arlington Capital Partners.

Previously it was disclosed that the company was expected to launch a new credit facility this month for the buyout and leads were announced, but specific timing and structure were still to be determined.

Closing is expected later this year, subject to customary conditions and regulatory approvals.

Novetta is a McLean, Va.-based provider of advanced analytics solutions.

Quanex on deck

Quanex Building Products scheduled a bank meeting for Tuesday to launch its recently announced $410 million senior secured credit facility that includes a $100 million five-year asset-based revolver and a $310 million seven-year covenant-light term loan B, a market source said.

The term loan is talked with 101 soft call protection for six months, the source continued.

Official price talk on the transaction is not yet out, but filings with the Securities and Exchange Commission have outlined expected initial revolver pricing at Libor plus 150 bps and expected term loan pricing at Libor plus 425 bps with a 1% Libor floor.

Wells Fargo Securities LLC is leading the deal that will be used with cash on hand to fund the acquisition of Woodcraft Industries for about $248.5 million, to refinance existing debt and for general corporate purposes.

Pro forma debt to EBITDA at close is expected to be 3.2 times.

Closing is targeted for the fourth quarter.

Quanex is a Houston-based supplier of window and door components. Woodcraft is a St. Cloud, Minn.-based supplier of doors and components.

Idera firms launch

Idera will hold a bank meeting on Thursday to launch its $425 million credit facility that was previously labeled as week of Sept. 14 business, according to a market source.

The facility consists of a $25 million revolver, a $300 million first-lien term loan and a $100 million second-lien term loan.

Jefferies Finance LLC is the lead arranger on the entire deal, and a joint bookrunner with Fifth Street on the second-lien loan.

Proceeds will be used to help fund the acquisition of Embarcadero Technologies Inc. from Thoma Bravo.

Idera is a Houston-based provider of IT performance monitoring solutions. Embarcadero is a San Francisco-based provider of professional grade database management tools for designing, developing and managing databases and the data they contain.

NN coming soon

NN set a bank meeting for Wednesday to launch its previously announced proposed $625 million senior secured credit facility (Ba3/BB-) that consists of a $100 million five-year revolver and a $525 million seven-year covenant-light term loan, according to a market source.

Recent filings with the Securities and Exchange Commission had expected initial pricing on the revolver at Libor plus 350 bps with a 50 bps commitment fee and the term loan expected at Libor plus 375 bps with a 1% Libor floor and 101 soft call protection for six months.

KeyBanc Capital Markets Inc., SunTrust Robinson Humphrey Inc. and Regions Capital Markets are leading the deal that will be used to help fund the acquisition of Precision Engineered Products Holdings Inc. for $615 million and to refinance existing debt.

NN plans bonds

NN is also expected to fund the acquisition with $300 million of senior notes, for which SunTrust is the left lead, and with cash on hand, the source said.

The notes are backed by a commitment for a $300 million senior unsecured bridge loan priced at Libor plus 725 bps with a 1% Libor floor. The spread will increase by 50 bps every 90 days until it hits a specified cap.

Closing is expected by the end of October, subject to customary conditions and regulatory approval.

NN is a Johnson City, Tenn.-based manufacturer and supplier of high precision metal bearing components, industrial plastic and rubber products and precision metal components. Precision Engineered Products is an Attleboro, Mass.-based manufacturer of highly engineered precision customized solutions serving the medical, electrical, transportation and aerospace end markets.

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