Nortek, Standard Aero cut pricing; NES breaks; Angelo Gordon portfolio auction Thursday

By Sara Rosenberg

New York, Aug. 16 - Nortek Holdings Inc. and Standard Aero both lowered pricing in the primary market on their institutional term loans on Monday and added step downs based on leverage on strong market demand. Meanwhile, on the secondary front, NES Rentals Inc. broke for trading and another portfolio auction surfaced.

Nortek reverse flexed its $700 million seven-year term loan to Libor plus 250 basis points from Libor plus 275 basis points and added a step down in pricing to Libor plus 225 basis points if leverage falls below 4.5x, according to a market source.

Furthermore, the $100 million six-year revolver was reverse flexed to Libor plus 225 basis points from Libor plus 250 basis points, the source added. The revolver carries a 50 basis points commitment fee.

Talk of a potential reverse flex has been floating around the bank loan market since last week based on oversubscription on the term loan and the company's $625 million 10-year senior subordinated notes pricing at the low end of talk at 8½%.

UBS and Credit Suisse First Boston are the lead banks on the $800 million credit facility (B1/B+), with UBS listed on the left.

Proceeds, combined with proceeds from the bond deal, will be used to help fund Thomas H. Lee Partners', in partnership with management, approximately $1.75 billion acquisition of Nortek.

Both the credit facility and the bonds are expected to close on Aug. 27.

Nortek, a Providence, R.I., designer, manufacturer and marketer of residential and commercial building products, is currently owned by some members of management and Kelso and Co. LP.

Standard Aero price cut

Standard Aero lowered pricing on its $325 million eight-year term loan B to Libor plus 250 basis points from Libor plus 275 basis points and added a step down to Libor plus 225 basis points if leverage falls below 5x, according to a fund manager.

This is the second modification made to the oversubscribed term loan since the deal first launched. During the first week of August, the syndicate opted to increase the term loan size to $325 million from $260 million in connection with a reduction in size of the company's proposed bond offering to $200 million from $265 million.

The $200 million 10-year notes are expected to price Tuesday and are talked in the 8½% context.

The $375 million credit facility (B2/B+) also contains a $50 million six-year revolver with an interest rate of Libor plus 275 basis points.

JPMorgan and Lehman Brothers are joint lead arrangers on the deal, with JPMorgan listed on the left. Credit Suisse First Boston is documentation agent.

Proceeds, combined with proceeds from the bond offering, will be used to help fund The Carlyle Group's acquisition of the Standard Aero division from Dunlop Standard Aerospace Group for about $670 million. The acquisition is expected to close in August.

Standard Aero is a provider of turbine engine maintenance, repair and overhaul for aircraft engines and industrial gas turbines.

NES hits plus 101 levels

NES Rentals Holdings Inc.'s $275 million six-year second-lien term loan (B3/B) broke for trading, with the relatively actively traded paper quoted at 101¼ bid, 101¾ offered on the break and pretty much throughout the day, according to a trader.

The second-lien term loan is priced with an interest rate of Libor plus 600 basis points and has call protection of 102 in year one and 101 in year two.

Bank of America and Bear Stearns are the lead banks on the deal, with Bank of America listed on the left.

Proceeds will be used to refinance existing bank debt.

NES Rentals is a Chicago equipment rental company to industrial and construction end-users.

Angelo Gordon auction Thursday

Yet another portfolio auction is scheduled to take place, this time with Angelo Gordon as the seller of a $240 million loan portfolio, according to a market source. Bids are due Thursday from dealers and "everyone is invited" to participate, the source said.

"From a quick glance, it looks like all par plus names. It should trade well. From looking at this, it could be the highest [bid] out of the three," the source added.

Last week, two auctions took place - one held by TCW for a $300 million portfolio that JPMorgan Chase won with a 100.76 cover bid and one held by Bain Capital for a $250 million portfolio that Wachovia won.

Bragg allocations likely next week

Bragg Communications is anticipating allocating its in-market credit facility early next week with closing expected to take place prior to Aug. 31, according to a market source.

The oversubscribed $200 million term loan B contained in the credit structure was recently reverse flexed to Libor plus 250 basis points from Libor plus 275 basis points and a step down was added to Libor plus 225 basis points if leverage falls below 4x, the source added.

Pricing on the C$300 million term loan A and the C$50 million revolver remained at Bankers Acceptance rate plus 275 basis points.

Leverage at close will be 4.7x for the borrower.

TD Securities is the sole lead bank on the deal.

Proceeds will be used to refinance existing debt.

Bragg Communications is a Halifax, Nova Scotia, media company.

Innophos closes

Bain Capital completed its acquisition of Innophos Inc., Rhodia's North American specialty phosphates business, for an enterprise value of $550 million, according to a company news release.

To fund the acquisition, Innophos got a new $270 million credit facility (B1/B+) consisting of a $220 million term loan with an interest rate of Libor plus 225 basis points and a step down to Libor plus 200 basis points depending on leverage, and a $50 million revolver with an interest rate of Libor plus 275 basis points.

Originally, the term loan was priced at Libor plus 250 basis points but was reverse flexed during syndication on strong demand, at which time the step down was added as well.

Bear Stearns and UBS were the lead banks on the deal, with Bear Stearns listed on the left.

Innophos will be based in Cranbury, N.J.

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