CIT moves on refi news; PSC breaks; Insight, HMA, Supervalu inch up; MultiPlan firms timing

By Sara Rosenberg

New York, July 27 - CIT Group Inc.'s first-lien term loan debt moved around on Tuesday after the market found out that the company will be repaying the borrowings with a new term loan - the syndication of which will begin later this week.

Also, PSC LLC's credit facility freed up for trading, Insight Global's term loan was better from its recent breaking levels, and Health Management Associates Inc. (HMA) and Supervalu Inc. rose on the back of earnings and an improvement in the market in general.

In other loan happenings, MultiPlan Inc. nailed down a bank meeting date for its credit facility, and Bourland & Leverich Supply Co. LLC launched its credit facility at the previously whispered indicative talk.

Additionally, GEO Group Inc.'s credit facility is oversubscribed, resulting in a flex down in pricing on the pro rata tranches.

CIT heads towards take-out levels

CIT's tranche 1 and tranche 2 first-lien term loan debt headed closer to 102 on Tuesday, which is the approximate take-out level that lenders will get when the company's proposed refinancing is completed, according to a trader.

The tranche 1 was quoted at 102 3/8 bid, 102 7/8 offered, down from 103¼ bid, 103¾ offered, and the tranche 2 was quoted at 101¾ bid, 102.1 offered, up from 101¼ bid, 101¾ offered, the trader said.

Currently, there is about $1.5 billion of the tranche 1 outstanding priced at Libor plus 1,000 bps with a 3% Libor floor and about $2.5 billion of the tranche 2 outstanding priced at Libor plus 750 bps with a 2% Libor floor.

Originally, the company's first-lien debt was sized at $7.5 billion, but $750 million was prepaid during the first quarter, $2.3 billion was prepaid during the second quarter and about $450 million was prepaid just after the second quarter ended.

CIT plans new term loan

In order to take out the existing first-lien debt, CIT will be launching with a bank meeting on Thursday a new $3 billion five-year non-amortizing term loan that is talked at Libor plus 500 basis points with a 1.75% Libor floor and an original issue discount of 98, according to a market source.

Other funds for the refinancing will come from $1 billion of cash on hand.

The new term loan includes call protection of 102 in year one and 101 in year two.

Bank of America, Morgan Stanley and Deutsche Bank are the lead banks on the deal.

Existing lenders are being given the option to roll into the new term loan, with tranche 1 lenders being offered a 225 bps fee and tranche 2 lenders being offered a 200 bps fee. If they choose not to roll, then the company will get new guys into the deal, the source said.

Commitments are due on Aug. 5.

CIT releases numbers

CIT also came out with earnings results on Tuesday, with the company reporting net income of $142.1 million, or $0.71 per diluted share, up from $97.3 million, or $0.49 per diluted share, in the first quarter.

Total interest income for the quarter was $993.5 million, compared to $1.049 billion last quarter.

Net interest revenue for the quarter was $179.9 million, compared to $211.2 in the previous quarter.

And, total cash at June 30 was $10.7 billion, up from last quarter, and consisted of $6.1 billion of cash at the bank holding company, $1.7 billion at CIT Bank, $1.7 billion at operating subsidiaries and $1.2 billion in other restricted cash.

CIT is a New York-based provider of financing to small businesses and middle-market companies.

PSC frees to trade

PSC's credit facility hit the secondary market, with the $175 million six-year term loan B quoted at 99 3/8 bid, 99¾ offered, according to a market source.

Pricing on the term loan B is Libor plus 550 bps with a 1.75% Libor floor, and it was sold at an original issue discount of 98.

During syndication, the spread was increased from initial talk of Libor plus 475 bps to 500 bps, and the original issue discount was sweetened from 981/2.

The company's $240 million credit facility also includes a $65 million five-year revolver.

RBC Capital Markets and Jefferies are the joint lead arrangers and bookrunners on the credit facility, and U.S. Bank and Amegy Bank joined on as the co-documentation agents.

PSC being acquired

Proceeds from PSC's credit facility will be used to help fund the buyout of the company by Lindsay Goldberg from Odysseus Holdings and Arrowhead Holdings for a total equity purchase price of $340 million and enterprise value of $331.5 million.

Equity of around 51% will comprise the remainder of the capitalization.

Pro forma for the transaction, the last 12 months ended May 31 total net leverage is 2.8 times.

Ratings are private and have a high single-B profile.

PSC is a Houston-based provider of hazardous waste management, industrial cleaning, and logistics services.

Insight Global better post break

Insight Global's $121 million term loan moved up to 97¾ bid on Tuesday after freeing up for trading at 97½ bid during the previous session, according to market sources.

Pricing on the term loan and on the company's $20 million revolver is Libor plus 700 bps with a 2% Libor floor and an original issue discount of 97. The term loan includes 101 soft call protection for one year.

During syndication, pricing on the entire facility was increased from most recent talk of Libor plus 600 bps. Talk before that was Libor plus 550 bps to 575 bps. Initial talk at the launch was Libor plus 525 bps, the floor was lifted from 1.75%, the discount widened from 98 and the term loan's call protection was added.

BNP Paribas is the lead bank on the $141 million credit facility (B1/B) that is being used, along with $35 million of mezzanine debt, to fund the buyout of the company by Harvest Partners.

Insight Global is an Atlanta-based provider of IT employment services.

Health Management gains ground

Health Management Associates' term loan moved up to 94¼ bid, 94¾ offered from 93 5/8 bid, 94 offered as the company came out with earnings that were in line with expectations and the market in general had a better tone, according to a trader.

For the second quarter, the company reported net income of $39.7 million, or $0.16 per share, compared to net income of $32.6 million, or $0.13 per share, last year.

Net revenue for the quarter was $1.25 billion, compared to $1.13 billion in the second quarter of 2009.

And, adjusted EBITDA for the quarter was $182.5 million, compared to $170 million in the previous year.

Health Management, a Naples, Fla.-based operator of hospitals, released its quarterly results on Monday evening.

Supervalu rises, too

Supervalu's term loans were also firmer with the general market and following the release of numbers, according to traders.

The term loan B-1 was quoted by two traders at 97 bid, 97½ offered, up from 96¾ bid, 97¼ offered, while the term loan B-2 was quoted by one trader at 96 5/8 bid, 97 1/8 offered, up from 96½ bid, 97 offered, and by a second trader at 96¾ bid, 97¼ offered, up from 96 5/8 bid, 97 1/8 offered.

For the first quarter of fiscal 2011, Supervalu reported net earnings of $67 million, or $0.31 per diluted share, compared to net earnings of $113 million, or $0.53 per diluted share, in the prior year.

Net sales for the quarter were $11.5 billion, compared to net sales of $12.7 billion in the first quarter of fiscal 2010.

And, first quarter net cash flows from operating activities were $337 million, compared to $492 million in the previous year, primarily reflecting changes in working capital and reduced net earnings.

Supervalu updates guidance

Also, Supervalu revised its fiscal 2011 net earnings estimate to reflect retail market exits in Connecticut and Cincinnati and the impact of labor disputes at Shaw's.

The company now expects full-year earnings to be in the range of $1.61 to $1.81 per diluted share, compared to the previous estimate of $1.65 to $1.85 per diluted share.

Non-GAAP adjusted diluted net earnings per share guidance was left unchanged at $1.75 to $1.95 per diluted share.

Also, identical store sales, excluding fuel, for the year are now projected to be roughly negative 5%.

The company also anticipates that debt reduction for the year will be about $600 million.

Supervalu CFO leaving

In more Supervalu news, it was announced on Tuesday that Pamela K. Knous, executive vice president and chief financial officer, has decided to leave the company to pursue other career interests.

Knous will step down from her role effective July 30 and has agreed to remain available to the company to assure a smooth and seamless transition of her responsibilities to her successor.

Sherry M. Smith, the company's current senior vice president, finance will be the interim chief financial officer until the search is completed.

Supervalu is an Eden Prairie, Minn.-based supermarket operator.

MultiPlan sets launch

Back over to the primary, MultiPlan has scheduled a bank meeting for 1:30 p.m. ET on Thursday at the Palace in New York to launch its proposed $1.375 billion credit facility, consisting of a $1.3 billion term loan and a $75 million revolver, according to a market source.

Previously, it was heard that the deal would be coming soon but specific timing had been unavailable.

Barclays Capital, Bank of America and Credit Suisse are the leads on the deal, with Barclays the left lead.

Proceeds from the facility, along with $675 million of notes, will be used to help fund the buyout of the company by BC Partners and Silver Lake from the Carlyle Group and Welsh, Carson, Anderson & Stowe.

MultiPlan is a New York-based provider of health care cost management services.

Bourland & Leverich launches

Bourland & Leverich held its bank meeting on Tuesday to launch a proposed $200 million senior secured credit facility that is being led by Jefferies, according to a market source.

As was previously reported, the facility includes a $125 million five-year term loan (B+) that is being talked at Libor plus 850 bps to 900 bps with a 2% Libor floor and an original issue discount of 97 to 98. The tranche has fixed amortization and a 75% excess cash flow sweep.

There is also a $75 million four-year ABL revolver that will be partially funded at closing.

Proceeds will be used to help fund the acquisition of the company by Jefferies Capital Partners.

Pro forma leverage is 2.9 times and equity will comprise 42% of capitalization.

Bourland & Leverich is a Pampa, Texas-based distributor of oil country tubular goods serving U.S. onshore oil and gas producing regions.

GEO Group well-met

GEO Group's $750 million credit facility (Ba3/BB+) saw strong demand from investors resulting in oversubscription and a change in pricing in the revolver and term loan A, according to a market source.

The $400 million five-year revolver and $150 million five-year delayed-draw term loan A are now priced at Libor plus 250 bps, down from Libor plus 275 bps, while pricing on the $200 million six-year term loan B was left unchanged at Libor plus 325 bps with a 1.5% Libor floor and an original issue discount of 99, the source said.

Upfront fees on the revolver and the term loan A range from 37.5 bps to 62.5 bps based on commitment size.

BNP Paribas is the lead bank on the deal

GEO Group buying Cornell

Proceeds from GEO Group's credit facility will be used to help fund the acquisition of Cornell Cos. Inc. and to refinance existing debt.

The transaction has an estimated enterprise value of $685 million, including the assumption of $300 million of Cornell debt and excluding cash.

Cornell stockholders can choose to receive GEO common stock or cash. In order to preserve the tax-deferred treatment of the transaction, no more than 20% of the outstanding shares of Cornell common stock may be exchanged for cash.

The acquisition is expected to close in the third quarter.

Boca Raton, Fla.-based GEO Group and Houston-based Cornell are prison operators.

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