NRG softens; DynCorp sets talk; Michael Foods may move deadline; Pabst tweaks pricing, OID

By Sara Rosenberg

New York, June 16 - NRG Energy Inc.'s strip of institutional bank debt was weaker in Wednesday's trading session as a result of market technicals, and commitments were due on the company's amend and extend proposal.

Over in the primary market, DynCorp International Inc. came out with price talk on its credit facility in conjunction with launching the transaction to potential lenders, and rumor has it that Michael Foods Inc. is considering the acceleration of its commitment deadline due to strong demand.

Also, Pabst Brewing Co. revised pricing on its credit facility and is oversubscribed at the new terms, Gentiva Health Services Inc. launched its pro rata debt and may be getting ready to come to market with its term loan B early next month, and chatter is that Citgo Petroleum Corp.'s term loans are going well ahead of Thursday's deadline.

NRG Energy slides

NRG Energy' strip of term loan and synthetic letter-of-credit facility debt traded lower possibly because of market technicals and possibly because the deadline hit for the company's proposed amendment and extension, according to traders.

The strip of debt was quoted at 94 bid, 95 offered, down from 95 bid, 95¾ offered, traders said.

Earlier this month, NRG held a lender call to launch a proposal, under which it is looking to extend at least $1 billion of its term loan B and synthetic letter-of-credit facility debt to August 2015 from Feb. 1, 2013.

Pricing on the extended institutional debt would be Libor plus 275 basis points, compared to pricing of Libor plus 175 bps on the non-extended borrowings.

NRG may not be offering enough

One market source told Prospect News that NRG Energy's amend and extend request seemed like a very light offer for pushing out maturities by two years.

"Getting a 100 bps on the margin and a small amendment fee. [It[ doesn't seem to be pricing in line with the rest of the market. My guess is they won't do it, but who knows," the source said.

Investors are being offered a 12.5 bps consent fee for the amendment, and term loan B and letter-of-credit facility lenders are also being offered a 12.5 bps extension fee.

In addition to the institutional debt extension, NRG Energy told lenders that it is looking to refinance its $1 billion revolving credit facility with a new five-year facility.

Citigroup is the lead bank on the deal.

NRG is a Princeton, N.J.-based owner and operator of diverse power generation portfolios.

DynCorp talk emerges

Moving to new deal happenings, DynCorp held a bank meeting on Wednesday at 1:30 p.m. ET at the Pierre in New York to kick off syndication on its proposed senior secured credit facility, and in connection with the launch, price talk was announced, according to sources.

The $565 million term loan was presented with talk of Libor plus 475 bps with a 1.75% Libor floor and an original issue discount of 97 to 98, sources said.

Bank of America, Citigroup, Barclays Bank and Deutsche Bank are the lead banks on the $715 million deal, which also includes a $150 million revolver.

Proceeds will be used to help fund the buyout of the company by Cerberus Capital Management LP for $17.55 in cash per share. The transaction is valued at about $1.5 billion, including the assumption of debt.

DynCorp plans notes

Other financing for the acquisition of DynCorp will come from $455 million of senior unsecured notes and $591.6 million in equity, according to recent filings with the Securities and Exchange Commission.

The bonds are backed by a commitment for a $455 million senior unsecured term loan.

Closing is expected in the third or fourth quarter, but could close as early as the end of June, subject to customary conditions, including DynCorp stockholder approval and regulatory approvals.

On May 27, the company received notice that early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act was granted, and a special meeting for stockholders to vote on the transaction is set for June 29.

DynCorp is a Falls Church, Va.-based government services provider in support of U.S. national security and foreign policy objectives.

Michael Foods mulls deadline change

Talk is that Michael Foods may move up the commitment deadline on its $790 million term loan to either 2 p.m. ET or 5 p.m. ET on Friday from Monday since the deal is going very well, according to a source.

The term loan is being talked at Libor plus 450 bps to 475 bps with a 1.75% Libor floor and an original issue discount of 98. There is 101 soft call protection for one year.

Bank of America, Goldman Sachs and Barclays are the lead banks on the $865 million deal (B1/BB-), which also includes a $75 million revolver.

Proceeds from the credit facility and $430 million of senior unsecured notes will be used to help fund the buyout of Michael Foods by GS Capital Partners from Thomas H. Lee Partners LP in a transaction valued at $1.7 billion.

Michael Foods is a Minnetonka, Minn.-based producer and distributor of food products.

Pabst modifies terms

Pabst Brewing came out with some changes to its $100 million five-year senior credit facility, including flexing the spread higher and increasing the original issue discount and, with the changes, the deal is oversubscribed, according to a market source.

Both the $10 million revolver and the $90 million term loan are now priced at Libor plus 500 bps, up from Libor plus 475 bps, and both are now being sold at an original issue discount of 98, up from 99, the source said.

As before, the two tranches include a 1.5% Libor floor.

With pricing established, Pabst Brewing, a Milwaukee-based brewer, anticipates closing on its credit facility either later this week or early next week, the source remarked.

GE Capital is the lead bank on the credit facility that is expected to be rated at B2/B and will be used to help fund the acquisition of the company by Dean Metropoulos.

Gentiva pro rata launches

As expected, Gentiva launched its $325 million of pro rata loans to banks on Wednesday, with both the $125 million revolver and the $200 million term loan A talked at Libor plus 400 bps with a 1.5% Libor floor and an original issue discount of 981/2.

And, talk is that the Atlanta-based home health care provider's $600 million term loan B may be getting ready to launch on July 1, one source said. A second source, however, remarked that he didn't think a firm date for the institutional launch had been set as of yet.

Sizes of the term loans can shift based on demand, with the term loan A able to go up to $300 million, which would result in the term loan B dropping to $500 million.

By comparison, recent filings with the SEC had the term loan B sized at $800 million, with no mention of a term loan A, and outlined expected pricing on the revolver and term loan B at Libor plus 325 bps, with the B loan having a 1.5% Libor floor.

Gentiva buying Odyssey

Proceeds from Gentiva's $925 million senior credit facility will be used to help fund the acquisition of Odyssey HealthCare Inc. for $27 per share, for an aggregate purchase price of about $1 billion, and to refinance existing debt.

Other funding for the acquisition of the Dallas-based provider of hospice care is expected to come from $305 million of eight-year senior unsecured notes, which are backed by a commitment for a $305 million 12-month senior bridge loan.

Bank of America, GE Capital, Barclays Bank and SunTrust are the joint lead arrangers and bookrunners on the credit facility, with Bank of America the administrative agent.

Covenants include a minimum interest coverage ratio and a maximum total leverage ratio.

Closing is expected in the third quarter, subject to standard conditions, including regulatory approvals and clearance under the Hart-Scott-Rodino Act as well as approval by Odyssey's stockholders.

Net leverage is expected to be around the 4.0 times area.

Citgo nets interest

Citgo's five-year and seven-year term loans are heard to be filling out rather nicely given their pricing, with lenders still having until Thursday to throw in their orders, according to a market source.

The $600 million five-year term loan is talked at Libor plus 600 bps and the $650 million seven-year term loan is talked at Libor plus 700 bps, with both tranches having a 2% Libor floor and being offered at an original issue discount of 98.

The five-year loan has call protection of 102 in years one and two, and 101 in year three, while the seven-year loan is non-callable for two years, then at 102 in year three and 101 in year four

When the credit facility was first launched in May, the company was looking to get just a $300 million five-year term loan that was being talked at Libor plus 350 bps with a 1.75% Libor floor and an original issue discount of 981/2.

However, the company then upsized its five-year term loan to the $500 million to $550 million area and added a $500 million seven-year term loan, before upsizing the tranches again to their current sizes. And, at the time of the first upsizing, price talk on the term debt was revised to the current levels.

Citgo getting revolver, too

Citgo's $2 billion senior secured credit facility (Ba2/BB+/BB+) also includes a $750 million revolver that is priced at Libor plus 450 bps with a 62.5 bps unused fee. The spread is determined by a ratings grid.

The revolver is being offered at upfront fees ranging from 100 bps to 150 bps based on order size.

Earlier in the syndication process, the revolver was upsized from $700 million and pricing was increased from Libor plus 325 bps.

BNP Paribas, RBS and UBS are the lead banks on the credit facility, with BNP the left lead.

Proceeds will be used to refinance existing debt. As a condition of the deal, the company must raise at least $1 billion in new debt.

Citgo still contemplating bonds

As was previously reported, as part of the refinancing, Citgo is considering selling $300 million of secured notes.

Initially, the company was planning $1.5 billion of notes, and a roadshow for the transaction actually began in mid-May, but because of market conditions, pricing never took place.

The increase in the amount of term loan debt that the company is getting is a result of the downsizing of the bonds.

In addition, there is still the possibility that the downsized notes offering may end up being rolled into the company's term loans, depending on how the bonds progress, and that there may be no notes at all.

Citgo is a Houston-based refiner and marketer of transportation fuels, lubricants, petrochemicals and other industrial products.

Triumph Group closes

In other news, Triumph Group Inc. closed on its $350 million senior secured term loan B (Baa3/BB+) that is priced at Libor plus 300 bps with a step-down to Libor plus 275 bps at less than 2.0 times leverage and a 1.5% Libor floor. It was sold at an original issue discount of 991/2.

During syndication, the loan was upsized from $300 million, pricing was lowered from Libor plus 325 bps with the addition of the step, and the discount was tightened from the 99 area.

RBC acted as the lead bank on the deal that was used to help fund the acquisition of Vought Aircraft Industries Inc. from the Carlyle Group, the completion of which was announced on Wednesday.

Other financing came from $350 million of 8.625% senior notes due 2018 and revolver borrowings.

Triumph is a Wayne, Pa.-based designer, engineer, manufacturer and repairer of aircraft components and accessories. Vought is a Dallas-based manufacturer of aerostructures for commercial, military and business jet aircraft.

BWAY completes loan

BWAY Holding Co. closed on its $565 million senior secured credit facility (Ba3/B+), consisting of a $75 million five-year revolver and a $490 million seven-year term loan, according to a news release.

Pricing on the term loan is Libor plus 375 bps with a 1.75% Libor floor, and it was sold at an original issue discount of 99½ - the low end of the initial 99 to 99½ talk.

Deutsche Bank, Bank of America and Barclays acted as the lead banks on the deal that was used to help fund the buyout of the company by Madison Dearborn Partners LLC for $20 in cash per share and to refinance existing debt.

Other financing came from $205 million of 10% senior notes due 2018 and equity.

BWAY is an Atlanta-based supplier of general line rigid containers.

Spectrum Brands wraps deal

Spectrum Brands Inc. also closed on its $1.05 billion credit facility on Wednesday, according to an 8-K filed with the SEC.

The facility consists of a $750 million six-year term loan (B2/B) at Libor plus 650 bps with a 1.5% Libor floor that was sold at an original issue discount of 98, and a $300 million ABL revolver at Libor plus 375 bps.

The term loan has 101 soft call protection for one year.

During syndication, the term loan was downsized from $1 billion, pricing was increased from Libor plus 450 bps, the discount widened from 99 and call protection was added.

Credit Suisse, Bank of America and Deutsche Bank acted as the lead banks on the deal that was used to help fund the company's merger with Russell Hobbs Inc. and to refinance Spectrum Brands' existing senior debt and a portion of Russell Hobbs' existing senior debt.

Spectrum Brands is an Atlanta-based consumer products company. Russell Hobbs is a Miramar, Fla.-based marketer and distributor of a broad range of branded small household appliances.

Paul A. Harris contributed to this report.

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