Brocade Communications softens with paydown news; Big West Oil floats talk on term loan

By Sara Rosenberg

New York, Jan. 4 - Brocade Communications Systems Inc.'s term loan moved lower during Monday's trading session after the company announced that lenders should expect a partial repayment in the near future.

Over on the new deal front, Big West Oil LLC began circulating price talk on its proposed term loan as the deal is gearing up to launch with a bank meeting later in the week.

Brocade dips on repayment

Brocade Communications' term loan lost some ground in trading as the company revealed plans to repay a portion of the debt, according to a trader.

The term loan was quoted at par ¼ bid, par 5/8 offered, down three quarters of a point from previous levels, the trader said.

The trader went on to explain that the debt is simply moving closer to par since that's where the paydown will take place.

Brocade offering notes

Early Monday morning, Brocade announced that it expects to sell $600 million of senior secured notes in a private placement.

Of the total net proceeds, $150 million will be used to help retire roughly $173 million of outstanding 2.25% subordinated convertible notes due in February 2010. The other funds for this repayment will come from cash on hand.

Meanwhile, the remaining proceeds from the new bonds will be used to fund the term loan paydown.

Brocade is a San Jose, Calif.-based supplier of end-to-end internet protocol based ethernet and storage area networking products for enterprises and service providers.

Big West Oil sets talk

Switching to the primary market, Big West Oil came out with price talk on its proposed $360 million five-year term loan ahead of the Thursday bank meeting that has been scheduled to launch the deal into syndication, according to a market source.

The term loan is being talked at Libor plus 950 basis points with a 3% Libor floor, the source said.

In addition, the loan will be offered to investors at an original issue discount of 96, the source continued.

Commitments will be due from lenders on Jan. 21.

Big West Oil also plans revolver

On top of the new term loan, Big West Oil will also be getting a $75 million three-year ABL revolving credit facility, the source added.

Bank of America is the lead bank on the $435 million deal that will be used for exit financing.

Total leverage will be in the area of 2.9 times.

Big West Oil is a Salt Lake City-based complex high conversion refinery. The facility employs about 130 people, has a total capacity of 35,000 barrels per day and refines a combination of Utah, Wyoming and Canadian crude oils into high-quality motor fuels and other specialty chemicals, including superior wax products.

The company is a wholly owned subsidiary of Flying J Inc., an Ogden, Utah-based integrated oil company that filed for bankruptcy on Dec. 22, 2008.

Butler Schein closes

On other news, the formation of Butler Schein Animal Health through the combination of Henry Schein Inc.'s animal health businesses and Butler Animal Health Supply was completed on Dec. 31, according to a news release.

To help fund the transaction, Butler Schein obtained a $350 million credit facility (B1/BB-), consisting of a $30 million revolver priced at Libor plus 350 bps and a $320 million term loan B priced at Libor plus 350 bps with a step-down to Libor plus 325 bps when leverage is less than 2.5 times.

In addition, the term loan B has a 2% Libor floor and was sold at an original issue discount of 991/2.

During syndication, the term loan B was upsized from $300 million and the original issue discount was tightened from 99.

JPMorgan acted as the lead bank on the deal.

Butler Schein Animal Health is a Dublin, Ohio-based companion animal health distribution company.

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