Kindred, Select Medical trade up with Medicare news, LodgeNet drops, Physiotherapy breaks

By Sara Rosenberg

New York, April 25 - Kindred Healthcare Inc. and Select Medical Corp. saw levels jump higher in trading on Wednesday with news of a proposed rule that would update Medicare payment policies and rates in a favorable way for acute care and long-term care hospitals, and LodgeNet Interactive Corp.'s term loan dropped on earnings results.

Also, Physiotherapy Associates' credit facility freed up in the afternoon, with the term loan quoted above its original issue discount price.

Over in the primary, PRV Aerospace LLC made some revisions to its credit facility, including increasing the spread and widening the discount, and On Assignment Inc. downsized its term loan B, upsized its revolver and added a new term loan A.

Additionally, Ineos Group Holdings SA nailed down pricing guidance on its in market covenant-light term loan and there is talk that the deal is being upsized as a result of strong demand, although by how much is still to be determined.

Furthermore, Harbor Freight Tools USA Inc. released talk on its term loan with its bank meeting, Attachmate Group and Communications Corp. of America surfaced with new deals plans and began circulating price talk ahead of their launches, and Affinity Gaming LLC revealed that it will be coming with a new loan as well.

Kindred, Select rise

Kindred Healthcare and Select Medical both saw their term loans gain ground in trading on Wednesday on the back of the government's release of a proposed rule that would update Medicare payment policies and rates for inpatient stays to general acute care hospitals and long-term care hospitals, according to traders.

Comments on the proposed rule are being asked for by June 25 and it is expected that a final rule will be issued by Aug. 1.

With the news, Kindred, a Louisville, Ky.-based health care services company, saw its term loan move up to 96½ bid, 97½ offered, from 94½ bid, 95½ offered, one trader said. A second trader was quoting it at 95¾ bid, 96¾ offered, up from 94¾ bid, 95¼ offered.

And, Select Medical, a Mechanicsburg, Pa.-based operator of specialty hospitals and outpatient rehabilitation clinics, saw its term loan improve to 97 bid, 97¾ offered from 96¼ bid, 97¼ offered, another trader added.

Medicare rule details

In a release, the Centers for Medicare & Medicaid Services (CMS) said that it expects a 2.3% increase in payment rates to general acute care hospitals in fiscal year 2013.

It is expected that the rate increase, along with other policies in the proposed rule and projected use of inpatient services, would increase Medicare's operating payments to acute care hospitals by about 0.9% in fiscal year 2013, and all in all, total Medicare spending on inpatient hospital services is projected to rise by about $175 million in that year.

For long-term care hospitals, CMS is anticipating a roughly $100 million increase in payments, or 1.9% rise, in fiscal year 2013.

Furthermore, an annual update to long-term care hospitals payment rates is being proposed at 2.1%, but this rate will be reduced by around 0.8% to 1.3% for a one time budget neutrality adjustment for discharges on or after Dec. 29, 2012.

Lodgenet slides

Lodgenet's term loan fell 1¾ points to 94¼ bid, 95¼ offered as first-quarter numbers were released that showed a wider net loss and lower revenue on a year-over-year basis, according to a trader.

For the quarter, the company reported a net loss attributable to common stockholders of $3.5 million, or $0.14 per share, versus a net loss of $2.3 million, or $0.09 per share loss.

Revenue for the quarter was $94.7 million, compared to $107.7 million in the first quarter of 2011.

For 2012, the company expects net income available to common shareholders in the range of negative $0.10 to positive $0.10 per share and annual revenue in the range of $405 million to $420 million.\par Lodgenet is a Sioux Falls, S.D.-based provider of interactive media and connectivity services to hospitality and health care businesses.

Physiotherapy starts trading

Also in the secondary, Physiotherapy Associates' credit facility broke, with the $100 million six-year term loan B quoted at 98½ bid, a trader remarked.

Pricing on the term loan, as well as on a $25 million five-year revolver, is Libor plus 475 basis points, after flexing recently from Libor plus 500 bps. The facility has a 1.25% Libor floor that was reduced from 1.5%, and was sold at an original issue discount of 98.

Jefferies & Co., GE Capital Markets and RBC Capital Markets LLC are the lead banks on the $125 million deal (Ba2/BB-) that will be used to help fund the buyout of the company by Court Square Capital Partners from Water Street Healthcare Partners and Wind Point Partners.

Other funds for the transaction will come from $210 million of 11 7/8% seven-year senior notes that priced last week at 98.841 to yield 12 1/8%.

Physiotherapy Associates is an Exton, Pa.-based provider of outpatient rehabilitation services.

PRV flexes up

Moving to the primary, PRV Aerospace reworked its $220 million credit facility, raising pricing to Libor plus 550 bps from Libor plus 475 bps and shifting the original issue discount to 98½ from 99, while leaving the 1.5% Libor floor intact, according to a market source.

The deal "got B3/B-" corporate ratings, the source said. "Book is building at revised talk."

The facility consists of a $30 million five-year revolver and a $190 million six-year term loan.

GE Capital Markets and KeyBanc Capital Markets LLC are the lead banks on the deal that will be used to help fund the buyout of the company by Court Square Capital Partners from Platte River Ventures.

PRV Aerospace is an Everett, Wash.-based aerospace and defense group.

On Assignment restructures

On Assignment revised the structure of its $540 million senior secured credit facility (Ba3/BB-), leaning towards more pro rata debt as there was demand from banks and the rate was attractive to the company, according to a market source.

The facility now consists of a $75 million five-year revolver, up from $50 million, a newly added $100 million five-year term loan A, and a $365 million seven-year term loan B, down from $490 million, the source said.

Pricing on the revolver and term loan A is Libor plus 325 bps, which is in line with where the revolver was initially launched, and the term loan B remained at Libor plus 375 bps with a 1.25% Libor floor, an original issue discount of 99 and 101 soft call protection for one year, the source continued.

Recommitments are due by end of day on Friday.

On Assignment buying Apex

Proceeds from On Assignment's credit facility will be used to fund the acquisition of Apex Systems Inc. for $383 million in cash and newly issued stock valued at $217 million and to refinance debt at both companies.

Funded debt of the combined company will total about 3.75 times estimated pro forma adjusted EBITDA for the 12 months ended March 31.

Closing is expected in May, subject to approval by On Assignment's shareholders, regulatory approvals and other customary conditions.

Wells Fargo Securities LLC, Bank of America Merrill Lynch and Deutsche Bank Securities Inc. are the lead banks on the credit facility.

On Assignment is a Calabasas, Calif.-based provider of professionals in the technology, health care and life sciences sectors. Apex is a Richmond, Va.-based information technology staffing and services firm.

Ineos talk surfaces

Ineos Group revealed formal price talk on its covenant-light term loan B (B1/B+) debt ahead of its noon ET on Thursday commitment deadline, according to a market source.

The three-year tranche is talked on the U.S. debt at Libor plus 450 basis points to 475 bps with a 1.25% Libor floor and an original issue discount of 99, and includes soft call protection of 102 in year one and 101 in year two, the source said.

And the six-year term loan is talked at Libor plus 525 bps to 550 bps on the U.S. tranche and at Euribor plus 550 bps to 575 bps on the euro piece, the source continued. The loan has a 1.25% floor, a discount of 98 to 981/2, and soft call protection of 102 in year one and 101 in year two.

At launch, talk was outlined in the low-6% context on the three-year loan and in the low 7% context on the six-year loan, with it known that all of the debt would include a 1.25% floor.

Ineos upsizing

Sources said that the term loan will be upsized by at least $500 million from its original $1.5 billion amount as investors have shown strong support for the deal, and as a result, Ineos' senior secured notes offering will be downsized by a similar amount.

The three-year term loan tranche was initially talked at up to $300 million, with the remaining amount coming from the six-year tranche.

The bonds, originally sized at about $2.2 billion, are talked at 7½% to 7 5/8% on the U.S. tranche and the euro tranche is talked ¼% back of the U.S. piece, with pricing expected to take place on Thursday.

Proceeds from credit facility and bonds will be used to take out senior secured debt, including revolver, term loan C and term loan D borrowings.

Barclays Capital Inc. and J.P. Morgan Securities LLC are joint global coordinators and joint bookrunners on the loan for the Lyndhurst, England-based chemical company, and Goldman Sachs & Co. and UBS Securities LLC are mandated lead arrangers and joint bookrunners.

Harbor Freight sets guidance

In more primary news, Harbor Freight Tools held a bank meeting on Wednesday afternoon to kick off syndication on its proposed credit facility, and shortly before the launch took place, price talk on the $1 billion seven-year first-lien term loan (B1/B+) was announced, according to a market source.

The term loan, for which commitments are due on May 4, is talked at Libor plus 400 bps with a 1.25% Libor floor and an original issue discount of 99, the source said. As was previously reported, there is 101 soft call protection for one year.

The company's $1.4 billion credit facility also provides for a $400 million ABL revolver.

Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and Wells Fargo Securities LLC are leading the term loan, and Wells Fargo is leading the revolver.

Harbor Freight, a Camarillo, Calif.-based provider of tools and equipment, will use proceeds to refinance existing debt and pay a dividend. Total leverage will be 3.7 times.

Travelport launches

Travelport Ltd. also launched during the session, and lenders are being asked to get their commitments in by May 2, a market source said.

As was previously reported, the company is seeking a $175 million 11/2-lien term loan due Nov. 22, 2015 that is talked at Libor plus 1,100 bps with a 1.5% Libor floor and an original issue discount of 96, and includes hard call protection of 103 in year one, 102 in year two and 101 in year three.

Credit Suisse Securities (USA) LLC and UBS Securities LLC are the lead banks on the deal that will be used to repay the company's non-extended term loan due in 2013.

Travelport is an Atlanta-based provider of transaction processing services to the travel industry.

Attachmate readies deal

Attachmate came out with plans to hold a bank meeting on Thursday at 9:30 a.m. ET to launch a $1.54 billion credit facility, and price talk on the term loan portion of the deal has already emerged, according to a market source.

The $1.1 billion six-year first-lien term loan is being talked at Libor plus 525 bps with a 1.5% Libor floor and an original issue discount of 99, and includes 101 repricing protection for one year, the source said.

Meanwhile, the $400 million seven-year second-lien term loan is being talked at Libor plus 900 bps with a 1.5% floor and a discount of 98, and this debt is non-callable for one year, then at 103 in year two, 102 in year three and 101 in year four, the source continued.

Also included in the facility is a $40 million revolver.

Attachmate lead banks

Credit Suisse Securities (USA) LLC, Bank of America Merrill Lynch, RBC Capital Markets LLC, Goldman Sachs & Co. and Wells Fargo Securities LLC are the lead banks on Attachmate's credit facility that will be used to refinance existing debt and fund a dividend.

The company had approached the market early this year with $400 million of incremental term loans for a dividend, but that deal was then pulled in February since terms were becoming unfavorable to the issuer.

As launched, the incremental debt has consisted of a $300 million first-lien term loan due April 27, 2017 talked at Libor plus 575 bps with a 1.5% Libor floor and an original issue discount of 98, and a $100 million second-lien term loan due Oct. 27, 2017 talked at Libor plus 900 bps with a 1.5% floor and a discount of 98. Call protection was going to match that of the existing loans.

Attachmate is a Seattle-based provider of access and integration software for legacy systems.

Communications Corp. pricing

Communications Corp. of America also announced a new credit facility, and set price talk on the first-lien term loan B component of the deal, according to a market source.

The $157.5 million seven-year first-lien term loan B is talked at Libor plus 650 bps with a 1.25% Libor floor, an original issue discount in the 98½ area and 101 soft call protection for one year, the source said.

The company's $197.5 million credit facility, which will launch with a 2:30 p.m. ET call on Thursday, also includes a $5 million five-year revolver and a $35 million ten-year second-lien term loan.

J.P. Morgan Securities LLC is leading the deal that will be used to refinance existing debt.

Expected corporate ratings are B3/B-, the source added.

Communications Corp. of America is a Lafayette, La.-based television broadcasting company focused on operating local stations in small and medium-sized markets.

Affinity coming soon

Affinity Gaming joined the calendar too, setting a bank meeting for Thursday to launch a $235 million credit facility that is being led by Deutsche Bank Securities Inc., J.P. Morgan Securities LLC, Jefferies & Co. and Macquarie Capital, according to a market source.

The facility consists of a $35 million five-year super priority revolver and a $200 million seven-year term loan that has 101 soft call protection for one year, the source said.

Proceeds, along with $200 million of notes, will be used to repay existing debt that was done when the company went through its bankruptcy process.

Affinity Gaming is a Las Vegas-based gaming company.

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