Windsor Foods holds steady in second day of trading; Connolly, DSM/Patheon on deck

By Sara Rosenberg

New York, Dec. 24 - Windsor Foods' term loan continued to be bid in line with its original issue discount on Tuesday after breaking in that context during the previous session.

Meanwhile, the primary market was pretty silent going into the holidays, and regarding the near-term calendar, Connolly Holdings Inc. and DSM Pharmaceutical Products/Patheon Inc. are the only two deals that have been announced so far for early January.

Windsor levels

Windsor Foods' term loan (B2/B+) was quoted at 99½ bid, par offered in Tuesday's quiet pre-holiday trading market, which is where it freed up on Monday, a trader said.

Pricing on the term loan is Libor plus 400 basis points with a 1% Libor floor and it was sold at a discount of 991/2.

The company's $450 million credit facility also includes a $100 million ABL revolver.

BMO Capital Markets, Bank of America Merrill Lynch and J.P. Morgan Securities LLC are the lead banks on the deal.

Proceeds are being used to refinance existing debt.

Windsor is a Houston-based manufacturer of frozen foods, primarily sold to the food service segment and also marketed to industrial accounts, national restaurant chains and retailers.

Connolly readies launch

Switching to the primary, Connolly is scheduled to hold a bank meeting on Jan. 8 to launch a new credit facility. Details on structure and pricing, however, are not yet available, according to a market source.

RBC Capital Markets LLC is the left lead on the deal that will be used to refinance existing bank debt.

Connolly is an Atlanta-based provider of technology-enabled recovery audit services.

DSM/Patheon coming soon

Also, DSM Pharmaceutical Products/Patheon is set to hold a bank meeting in early January to launch its $1.35 billion credit facility that will be used to fund the merger of the two companies.

The facility consists of a $200 million five-year revolver and a $1.15 billion seven-year term loan B.

Official spread talk on the deal is not yet out, but recent filings with the Securities and Exchange Commission have said that the tranches are expected to be priced at Libor plus 425 bps with a 1% Libor floor.

The 1% Libor floor on the term loan B has been confirmed by sources, and it has also been said that there will be 101 soft call protection and amortization of 1% per annum.

DSM/Patheon lead banks

UBS Securities LLC, J.P. Morgan Securities LLC, Jefferies Finance LLC, KeyBanc Capital Markets and Morgan Stanley Senior Funding Inc. are the joint bookrunners on the DSM Pharmaceutical Products/Patheon credit facility.

Under the agreement, JLL Partners and Royal DSM will acquire Patheon for $9.32 per share, implying an equity value of about $1.4 billion and a total enterprise value of $1.95 billion.

Patheon will then be merged with DSM Pharmaceutical Products, and the combined company will be 51% owned by JLL and 49% by DSM.

DSM will receive a seller note of $200 million, thereby valuing DSM Pharmaceutical Products at $670 million.

Other funds for the creation of the new company will come from $772 million of equity.

Closing is expected in the first half of 2014, subject to customary conditions.

The combined company will be a contract development and manufacturing organization for the pharmaceutical industry with anticipated sales of around $2 billion.

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