Biomet up with sales numbers; GM, Visteon bid higher; cash rally continues; TNS readies allocations

By Sara Rosenberg

New York, April 8 - Biomet Inc.'s term loan B gained some ground during Wednesday's trading session following the release of favorable sales results for the third fiscal quarter.

Also in the secondary, General Motors Corp.'s term loan and Visteon Corp.'s old term loan were bid up with the rest of the cash market but also on news of the launch of auto supplier support programs backed by the government.

Switching over to primary happenings, TNS Inc.'s term loan is expected to allocate next week as documentation is being wrapped up on the oversubscribed deal.

Biomet better with sales

Biomet's term loan B was stronger in trading as investors reacted positively to the company's quarterly sales results, according to a trader.

The term loan B was quoted at 92½ bid, 93½ offered, up from 91½ bid, 92½ offered on Tuesday, the trader said.

Early Wednesday morning, Biomet revealed that, for the third fiscal quarter, its net sales increased 2% to $615 million from $603.1 million for the third quarter of fiscal year 2008.

Biomet is a Warsaw, Ind.-based designer, manufacturer and marketer of products used primarily by musculoskeletal medical specialists in both surgical and non-surgical therapy.

GM, Visteon higher

General Motors and Visteon both saw their term loan debt move up with the rest of the cash market, but also spurring the names forward was news of the launch of auto supplier support programs, according to a market source.

GM, a Detroit-based automotive company, saw its term loan quoted at 45 bid at the end of the day, up from 42¾ bid, 43¾ offered on Tuesday, the source said, remarking that Wednesday late morning, the term loan had been at 43½ bid, 45½ offered.

And, Visteon, a Van Buren Township, Mich.-based automotive supplier focused on climate control systems, electronic/lighting products and interiors, saw its old term loan quoted at 17½ bid versus 16 bid on Tuesday, the source added.

GM launches support programs

On Wednesday, GM and Chrysler LLC launched support programs for auto suppliers, which are open to any receivable created with respect to goods shipped after March 19 made on qualifying commercial terms.

"These efforts, backed by U.S. Treasury resources, will help stabilize the auto supply base and restore credit flows in a critical sector that employs more than 500,000 American workers across the country," said Jenni Engebretsen, spokesperson for the U.S. Department of the Treasury, in a news release.

"During this difficult period of restructuring in the auto industry, the Supplier Support program will provide supply companies with access to liquidity and protect good-paying American jobs while giving GM and Chrysler reliable access to the parts they need," Engebretsen added.

Cash still strengthening

In more trading news, the cash market in general was once again better on Wednesday, with CLOs cited as the source behind the move in higher-quality names and unknown buyers pushing up lower-quality names as well.

"Everything is just bid up. [The cash market is] up about another half a point. Same themes. [There's a] strong CLO bid on high-quality assets," one trader remarked.

But, it's not just the high-quality stuff that's been seeing an improvement, according to another market source.

"This rally really started two or three days after the equity market started going up. From mid-December to mid-March it was really BB and single-B's moving up. Suddenly when the market started to rally [in around mid-March, the market] got some major moves on the crummier stuff," the source remarked.

Better names on the rise

Loans that are considered to be on the higher quality side of things have been steadily moving higher, including names like Celanese Corp. and Michaels Stores Inc. - which is considered to be a pretty good loan in the retail space, the market source said.

Celanese, a Dallas-based chemical company, saw its term loan B quoted at 91 bid, 92 offered on Wednesday, up from 88¾ bid, 90¼ offered during the previous day.

Michaels, an Irving, Texas-based specialty retailer of arts, crafts, framing, floral, wall decor, and seasonal merchandise for the hobbyist and do-it-yourself home decorator, saw its term loan B quoted at 59½ bid, 60½ offered, up on the bid side from 58½ bid, 60½ offered on Tuesday.

The source went on to explain that some of the really high-quality stuff is bumping up against valuation. For example, Wm. Wrigley Jr. Co., a Chicago-based confections company, has seen its term loan B quoted in the 99s for weeks.

Lower quality trading up too

Although some higher-quality names may have hit a bit of a wall, some "bad stuff", like Las Vegas Sands Corp., Claire's Stores Inc. and Burlington Coat Factory Warehouse Corp., have been ticking higher in recent times, the market source continued.

Las Vegas Sands, a Las Vegas-based developer of multi-use integrated resorts, saw its strip of institutional bank debt quoted at 55 bid, 56 offered on Wednesday, up from 54¾ bid, 55¾ offered on Tuesday, the source said.

Claire's, a Pembroke Pines, Fla.-based specialty retailer offering value-priced jewelry and accessories, saw its term loan B quoted at 43 bid, 45 offered, versus 42 bid, 43½ offered during the previous session.

And, Burlington, a Burlington, N.J.-based retailer of branded apparel, saw its term loan B quoted at 47 bid, 49 offered, compared to 46½ bid, 48½ offered on Tuesday.

"Don't know who the buyers are. Can't be the CLOs. They buy 80 and up. Got to be new money of some sort. Why they're buying those types of names I'm not sure. Could feel they're cheap in a world of rallying," the source added.

TNS allocations nearing

Moving to new deal happenings, TNS is hoping to give out allocations on its $250 million incremental term loan (B1) early on next week, according to a market source.

The term loan, due March 28, 2014, is priced at Libor plus 600 basis points with a 3.5% Libor floor and carries 101 soft call protection for one year.

Investors were offered the loan at an original issue discount of 90.

Amortization is 7.5% in the first year, 10% in the second and third years and 12.5% in the fourth and fifth years.

Financial covenants include a limit on capital expenditures, which will initially be $50 million in the first year with step-ups to be agreed upon; a maximum leverage ratio, which will initially be 3.25 times with step-downs to be agreed upon; and a minimum consolidated fixed-charge coverage ratio, which will initially be 1.20 times with step-ups to be agreed upon.

TNS acquiring VeriSign business

Proceeds from TNS' incremental term loan will be used to help fund the acquisition of VeriSign Inc.'s communication services group for $230 million in cash.

Expected pro forma leverage is around 21/2.

SunTrust is the bookrunner and lead agent on the new loan, which was oversubscribed as of late last week.

The deal had been met with a good reception from the start as around 64 institutions were represented in the room at the company's mid-March bank meeting and a number of other investors attended via the phone, and the company's existing lenders showed some early interest in the transaction.

In connection with the new loan, the company's existing $178.5 million term loan B will be amended to accommodate the new debt and to revise pricing to Libor plus 600 bps with a 3.5% Libor floor from the current rate of Libor plus 200 bps.

TNS is a Reston, Va.-based provider of business-critical, cost-effective data communications services for transaction-oriented applications.

© 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.