Yankee, Paetec, Roundy's set talk; Plastech postpones relaunch; Michaels dips; Barclays wins auction

By Sara Rosenberg

New York, Jan. 16 - The Yankee Candle Co. Inc., Paetec and Roundy's Supermarkets Inc. came out with price talk on their new bank deals as the transactions were launched during Tuesday's market hours.

In other primary news, Plastech Engineered Products Inc. pushed off the relaunch of its refinancing credit facility to sometime next week from Tuesday and Wednesday of this week as the company needed more time to process some financials.

On the secondary side, Michaels Stores Inc.'s term loan softened in trading as news of a repricing hit the market, and Barclays surfaced as the winner in a par name portfolio auction.

Yankee Candle held a bank meeting on Tuesday to kick off syndication of its credit facility, and in conjunction with the launch, price talk on the institutional term loan emerged, according to a market source.

The $650 million term loan was presented to lenders with opening price talk set at the Libor plus 250 basis points area, the source said.

The company's $775 million senior secured credit facility also includes a $125 million revolver tranche.

Ratings on the deal are expected to surface later this week, the source added.

Lehman Brothers and Merrill Lynch are the lead banks on the facility that will be used, along with $525 million in high-yield notes, to fund Madison Dearborn Partners, LLC's leveraged buyout of Yankee for $34.75 in cash per common share. The total value of the transaction, including assumed debt, is $1.7 billion.

As a backup for the bonds, the company has received a commitment for a $300 million senior unsecured increasing-rate bridge facility and a $225 million senior subordinated increasing-rate bridge facility.

Equity financing for the transaction is expected to total $433.3 million.

The acquisition, which is expected to close in the first quarter of 2007, is subject to approval by Yankee's shareholders as well as other customary closing conditions.

Yankee is a South Deerfield, Mass., designer, manufacturer, wholesaler and retailer of scented candles.

Paetec guidance surfaces

Continuing on the price talk front, Paetec launched its $50 million five-year revolver (B1/B) and $625 million six-year first-lien term loan B (B1/B) with talk of Libor plus 350 bps, and its $175 million seven-year second-lien term loan (Caa1/CCC+) with talk of Libor plus 650 bps at a Tuesday bank meeting, according to a market source.

By comparison, according to previous filings with the Securities and Exchange Commission, the revolver and first-lien term loan were said to be expected at Libor plus 375 bps, while the second-lien term loan was said to be expected at Libor plus 700 bps.

The revolver carries a 50 bps unused fee.

The second-lien term loan carries call protection of 102 in year one and 101 in year two.

Deutsche Bank and Merrill Lynch are joint lead arrangers and joint bookrunners on the $850 million deal, with Deutsche the left lead and administrative agent, Merrill the syndication agent and CIT Group the documentation agent.

Proceeds from the credit facility will be used to help fund the company's merger with US LEC Corp., to refinance both companies' debt and to fund the repurchase of US LEC's series A preferred stock held by Bain Capital and Thomas H. Lee Partners LP.

Under the merger agreement, Paetec and US LEC will become wholly owned subsidiaries of a new publicly owned holding company New Paetec. Taking into account outstanding rights to acquire shares in the new holding company in the future, US LEC security holders will own about one-third and Paetec security holders will own about two-thirds of the new holding company.

Total debt to adjusted EBITDA will be 4.3 times, and net debt to adjusted EBITDA will be 4 times.

The new holding company will be based in Fairport, N.Y., and will operate as a communications provider.

Roundy's price talk

Another deal that released price talk on Tuesday was Roundy's Supermarkets as a conference call was held in the morning to launch its proposed term loan add-on (Ba3/B+), and at that time, the company also announced plans to reprice its existing term loan debt, according to a market source.

The company launched its $57.5 million term loan add-on with price talk of Libor plus 275 bps and is proposing to lower pricing on its existing term loan to Libor plus 275 bps from Libor plus 300 bps, the source said.

Bear Stearns is the lead bank on the deal that will be used fund the acquisition of five Jewel-Osco stores from Supervalu and reduce borrowings under the company's existing revolver.

Roundy's is a Milwaukee food retailer and wholesaler.

Plastech pushes off relaunch

Plastech Engineered Products postponed the relaunching and remarketing of its credit facility to sometime next week (a specific date has not been set yet) so that it could have more time to finish processing 2006 numbers, according to a market source.

The relaunch was previously expected to begin on Tuesday with a conference call and then one-on-one meetings with accounts were going to take place on Tuesday and Wednesday.

Details on the restructured credit facility will emerge at the time of the relaunch, the source added.

Sources have previously said that the restructured deal might be "somewhere along the lines" of a $615 million credit facility consisting of a $225 million ABL revolver at Libor plus 200 bps, a $265 million first-lien term loan B at Libor plus 550 bps with call protection of 102 in year one and 101 in year two, and a $125 million second-lien term loan at Libor plus 900 bps with a grid.

The original deal was launched in November as a $600 million credit facility consisting of a $200 million ABL revolver (B1/BB) talked at Libor plus 200 bps, a $250 million first-lien term loan B (B2/B+) talked at Libor plus 450 to 500 bps and a $150 million second-lien term loan (Caa2/B-) talked at Libor plus 750 to 800 bps.

The term loan B was launched with 101 soft call protection for one year, and the second-lien term loan was launched with call protection of 102 in year one and 101 in year two.

As syndication progressed, pricing guidance on the first-lien term loan B narrowed to Libor plus 475 to 500 bps, and then expectations emerged that final pricing would end up at the high end of talk at Libor plus 500 bps.

In addition, the market was anticipating that pricing on the ABL revolver would end up in line with initial talk since the tranche was oversubscribed.

As for the second-lien term loan, talk around mid-December was that the tranche would undergo some significant changes, with pricing expected to come wider than the original guidance and additional call premiums expected to be layered into the deal.

No official word on second-lien changes or final pricing on the first-lien term loan B and ABL revolver ever emerged before the end of 2006.

Goldman Sachs is the lead bank on the deal that will be used to refinance existing debt.

Plastech is a Dearborn, Mich., maker of blow-molded and injection-molded plastic products, primarily for the automotive industry.

Navistar upsizes, firms pricing

Navistar International Corp. increased the size of its credit facility and firmed pricing on both tranches at Libor plus 325 bps, the wide end of recently revised price talk of Libor plus 300 to 325 bps, but tighter than original talk at launch of Libor plus 350 bps, according to a market source.

The facility upsizing came from an increase to the size of the five-year synthetic revolver to $400 million from $200 million, the source said.

The company's five-year senior unsecured term loan size was left unchanged at $1.1 billion.

Both the revolver and the term loan are non-callable for one year and then callable at 101 in year two and par thereafter.

JPMorgan, Credit Suisse, Bank of America and Citigroup are the lead banks on the now $1.5 billion credit facility (NA/NA/BB-) that is expected to close this week, with JPMorgan the left lead.

Proceeds will be used to replace the company's existing senior unsecured $1.5 billion credit facility, which expires in March 2009.

Navistar is a Warrenville, Ill., producer of commercial truck, school bus and mid-range diesel engines.

David's Bridal sets term loan talk

David's Bridal Inc. came out with official price talk of Libor plus 250 bps on its in-market $315 million seven-year term loan B now that ratings of B2/B have emerged on the deal, according to a buyside source.

Previously, some market players had speculated that price talk on the term loan might be Libor plus 275 bps, but official price talk had been labeled as "to be determined" since the deal's launch last week.

The company's $425 million credit facility also includes a $110 million six-year asset-based revolver.

Bank of America, Credit Suisse and JPMorgan are the lead banks on the deal, with Bank of America the left lead.

Proceeds will be used to fund Leonard Green & Partners, LP's acquisition of the 269-store David's Bridal and 10-store Priscilla of Boston businesses from Federated Department Stores, Inc. for about $750 million.

The acquisition is expected to close in the first quarter, pending regulatory approvals.

David's Bridal is a Conshohocken, Pa., retail chain specializing in bridal gowns.

Michaels weaker on repricing

Moving to the secondary market, Michaels Stores' covenant-light term loan fell a bit in trading on Tuesday as the company launched a repricing of the loan that would cut the spread by 25 bps, according to a trader.

The term loan closed the day at par 5/8 bid, 101 offered, down about a quarter of a point from previous levels, the trader said.

Under the repricing proposal, which is being led by Deutsche Bank, the company is looking to reduce the spread on its term loan to Libor plus 275 bps from Libor plus 300 bps.

The company will also pay down $50 million of the term loan and reduce outstanding borrowings under its asset-based revolver.

Michaels Stores is an Irving, Texas, specialty retailer of arts, crafts, framing, floral, wall decor and seasonal merchandise for the hobbyist and do-it-yourself home decorator.

Barclays wins portfolio auction

Barclays won an auction on Tuesday for a $96 million portfolio consisting of a broad range of par names, according to a market source.

RBS was the cover bid for the portfolio at 100.47.

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