ACCO Brands mulls alternative structure with pro rata debt; Chrysler rises with numbers

By Sara Rosenberg

New York, Jan. 4 - ACCO Brands Corp. recently revealed details on a credit facility commitment that includes term loan B debt and an asset-based revolver. The company, however, is considering bringing the deal to market with a different structure that could include pro rata borrowings.

Also on the new deal front, PennantPark Investment Corp. emerged on Wednesday with plans to bring a new deal to market next week and released price talk on the facility.

Meanwhile, over in trading, Chrysler Group LLC's term loan was stronger following the company's release of December sales numbers that showed a year-over-year improvement.

Regarding the secondary market in general, things were directionally unclear, with some names up, like Clear Channel Communications Inc. and Emdeon Inc., some down, including US Airways Group Inc., and some flat, such as First Data Corp. Movements were attributed to market technicals and light volume.

ACCO may rework financing

ACCO Brands has received a commitment for an $845 million senior secured credit facility, but is looking at ways to tweaks its financing plans so as to lower interest expense, according to a market source.

As committed, the deal consists of a $480 million seven-year term loan B, a $190 million seven-year term loan B at Spinco and a $175 million five-year multicurrency asset-based revolver.

Under consideration is breaking up the $670 million of term loan B debt to include a term loan A tranche that would carry lower pricing than the B loan, while leaving the total amount of term loan borrowings unchanged, the source said. Based on a recent filing with the Securities and Exchange Commission, the term loan B loans are expected to be priced at Libor plus 475 basis points with a 1.25% Libor floor and include 101 soft call protection for one year.

Also being reviewed is replacing the asset-based revolver with a cash-flow revolver, the source continued. The regulatory filing had pricing on the asset-based facility at Libor plus 200 bps initially, with the ability to range from Libor plus 175 bps to 225 bps based on excess availability.

ACCO funding merger

Proceeds from ACCO's credit facility will be used to fund its merger MeadWestvaco's office supplies business, repay ACCO's 10 5/8% senior secured notes and for ongoing working capital requirements.

Under the agreement, MeadWestvaco will establish a separate entity to hold the consumer & office products business, the shares of which will be distributed to MeadWestvaco shareholders in a tax-free transaction in return for a $460 million dividend. Immediately after the spin-off and distribution, the newly formed company will merge with ACCO.

The merger is valued at roughly $860 million, and at completion, MeadWestvaco shareholders will own 50.5% of the combined company.

ACCO plans notes

In addition to the credit facility, ACCO is planning to approach the high-yield market with a $270 million bond offering that is backed by a commitment for a $270 million senior unsecured bridge loan, the source said.

Barclays Capital Inc., Bank of America Merrill Lynch and BMO Capital Markets Corp. are the lead banks on the credit facility and bonds, with Barclays the left lead on the debt.

Closing on the transaction is expected in the first half of this year, subject to approval by ACCO shareholders and the satisfaction of customary closing conditions and regulatory approvals, including a ruling from the U.S. Internal Revenue Service on the tax-free nature of the transaction.

ACCO is a Lincolnshire, Ill.-based office supply manufacturer.

PennantPark readies deal

Continuing on the topic of new issues, PennantPark Investment revealed that it will be holding a bank meeting in New York on Jan. 12 to launch a proposed $325 million three-year revolver with a one-year term out period, according to a market source.

The revolver is talked at Libor plus 275 bps with a 50 bps unused fee, the source said.

SunTrust Robinson Humphrey Inc. is the lead bank on the deal that will be used to refinance an existing $315 million revolver.

At close, about 70% plus of the facility will be drawn.

PennantPark is a New York-based investment company that has elected to be treated as a business development company.

Chrysler gains ground

Switching to trading happenings, Chrysler's term loan moved up to 95¾ bid, 96¾ offered from 95½ bid, 96½ offered after December sales numbers were announced, according to a trader.

For the month, the company reported U.S. sales of 138,019, a 37% increase from 100,702 in December 2010.

Total car sales for the month were 34,844, up 143% from 14,343 in the prior year, and total truck sales were 103,175, up 19% from 86,359 in 2010.

"Chrysler Group finished a year of growth on a strong note with our December retail sales soaring 45% to our highest dealer retail sales in four years," said Reid Bigland, president and chief executive officer-Dodge Brand and head of U.S. sales.

"Looking back, we were the fastest-growing automaker in the country, increasing our market share 1.3% points during 2011."

Chrysler is an Auburn Hills, Mich.-based automotive company.

Clear Channel, Emdeon gain

Clear Channel and Emdeon both saw their term loan levels improve on Wednesday as more buyers were seen in these names, according to traders.

Clear Channel's term loan B was quoted by one trader at 75¾ bid, 76¾ offered, up half a point on the day, and by a second trader at 75¾ bid, 76¾ offered, up from 75 bid, 76 offered. Its term loan C was quoted by the first trader at 72½ bid, 74 offered, unchanged from Tuesday, and by the second trader at 73¼ bid, 74¼ offered, up from 73 bid, 74 offered.

As for Emdeon, its term loan B was quoted by a market source at 101 1/8 bid, 101 5/8 offered, up an eighth of a point, with the source remarking that high quality names like Emdeon were feeling very strong during the session.

Clear Channel is a San Antonio-based media and entertainment company. Emdeon is a Nashville-based provider of revenue and payment cycle management solutions that connect payers, providers and patients in the U.S. health care system.

US Airways dips

On the flip side, US Airways watched its term loan slide lower, with one trader saying that he saw a lot of activity in the name on no credit specific news.

The term loan was quoted at 87 bid, 88 offered, down from 87¼ bid, 88¼ offered, the trader remarked.

He explained that there are accounts buying names in the secondary market because they have money to put to use and other accounts are selling because they want more money to put to use. In a name like US Airways, it was just a day in which sellers outweighed buyers, he added.

US Airways is a Tempe Ariz.-based airline company.

First Data steady

Meanwhile, First Data, which traded up on Tuesday due to generally favorable market conditions, was flat on Wednesday, according to a trader.

First Data's non-extended term loan was quoted by the trader at 91½ bid, 92¼ offered. By comparison, on Friday, the non-extended loan was seen at 90¾ bid, 913/4.

First Data is a Greenwood Village, Colo.-based provider of electronic commerce and payment services.

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