Applica loan disappears, Spectrum trades down as buyout terminated; Ticketmaster, DynCorp tweak deals

By Sara Rosenberg

New York, July 14 - Applica Pet Products LLC's credit facility has been pulled as a result of the cancellation of the acquisition that the deal was going to finance, and in reaction to the news, the term loan B of Spectrum Brands Inc., the seller, moved lower in the secondary market.

In other news, Ticketmaster's credit facility was upsized after the company downsized its bond offering, and pricing on the institutional term loan was increased, while DynCorp International Inc. reduced the size of its credit facility.

Applica Pet Products removed its proposed credit facility from the market after Salton Inc.'s purchase of United Pet Group from Spectrum Brands fell through, according to a market source.

In addition, following the emergence of the news, Spectrum Brands' term loan B weakened in trading with levels quoted at 91¼ bid, 92¼ offered, down from 93 bid, 94 offered, by one trader and at 91 bid, 93 offered, down from 92 bid, 94 offered, by a second trader.

The buyout was canceled on Sunday as a result of Spectrum Brands being unable to obtain the consent of its senior lenders for the sale, which was a condition to the completion of the transaction and a problem that was originally announced a day before the Applica Pet bank meeting took place.

However, when first disclosing the senior lender problem, Spectrum Brands had said that the definitive purchase agreement continued to be in full force and effect, and that it intended to comply with its obligations thereunder in order to satisfy the conditions necessary to close the sale.

Applica Pet was going to function as the acquisition subsidiary for United Pet Group, a marketer and manufacturer of pet supplies for fish, dogs, cats, birds and other small domestic animals, and was going to be a wholly owned subsidiary of Salton.

To help fund the transaction, Applica Pet was in market with a $325 million credit facility (B1/BB), consisting of a $25 million revolver and a $300 million term loan, with both tranches talked at Libor plus 500 basis points.

The term loan had a 3.25% Libor floor and was being offered to investors at an original issue discount of 98.

Credit Suisse and GE Capital were acting as the lead banks on the deal, with Credit Suisse the left lead.

Proceeds from the sale of the business were expected to be used by Spectrum Brands to repay a portion of the borrowings outstanding under its ABL credit facility along with other senior bank debt.

Salton was going to buy the pet business for $692.5 million in cash, plus additional consideration in the form of $98 million of Spectrum Brand's variable-rate toggle senior subordinated notes due 2013 and $124.5 million of Spectrum Brand's senior subordinated notes due Feb. 1, 2015, in each case taking into account the principal amount and any accrued interest.

Other acquisition financing was going to come from equity provided by Harbinger Capital Partners, Salton's controlling stockholder.

As part of the investment, Harbinger Capital Partners was going to contribute the Spectrum Brands notes to Salton.

"Despite our desire and diligent efforts to complete this transaction upon the negotiated terms, we have been unable to obtain the consent of our senior lenders necessary to close on a basis that would be in the best interests of our shareholders and the company," said Kent Hussey, chief executive officer of Spectrum Brands, in a news release.

"We will therefore continue to operate the global pet supply business and work to capture the strong market potential we see there. Additionally, our board and management team remain committed to finding and executing appropriate alternatives for reducing the indebtedness of the company," Hussey added in the release.

Spectrum Brands said that it believes it has sufficient liquidity to run its businesses being that at June 29, there was $72.7 million of cash on its balance sheet, and it expects growth in both sales and adjusted EBITDA for the full year fiscal 2008 versus full year fiscal 2007.

Furthermore, the company projects that its fiscal 2009 free cash flow from operations, which would be available to reduce outstanding debt, will range between $40 million to $50 million. This projection includes an estimate of cash flows from operating activities for fiscal 2009 of $75 million to $85 million less capital expenditures of $35 million.

Under the acquisition termination agreement, Spectrum Brands agreed to pay Salton within two business days $3 million as a reimbursement of expenses.

Spectrum Brands is an Atlanta-based manufacturer and marketer of consumer batteries, pet supplies, electric shaving and grooming, electric personal care and portable lighting products. Salton is a Miramar, Fla.-based marketer and distributor of small household appliances.

Ticketmaster ups B loan size and pricing

Ticketmaster raised the size of its term loan B by $100 million after the decision was made to reduce its senior notes offering to $300 million from $400 million, and pricing on the loan tranche was bumped up, according to a market source.

The $350 million 61/2-year term loan B, up from $250 million, is now priced at Libor plus 325 bps, up from initial talk at launch of Libor plus 275 bps, the source said, adding that the original issue discount on the paper was left unchanged at 981/2.

Ticketmaster's $650 million credit facility (Ba1/BBB), up from $550 million, also includes a $200 million five-year revolver and a $100 million five-year term loan A, with both of these tranches priced at Libor plus 250 bps. The size and pricing on these pro rata tranches remained in line with initial talk.

JPMorgan and Merrill Lynch are the lead banks on the deal that will be used to help fund the company's spin-off from IAC/InterActiveCorp.

Ticketmaster is a West Hollywood, Calif., live entertainment ticketing and marketing company.

DynCorp reduces deal size

DynCorp lowered the size of its credit facility (Ba1) to $385 million from $450 million and announced plans for a $125 million add-on to its 9½% senior subordinated notes that will be sold in a private placement, according to a company spokesman.

Under the changes, the company's term loan A is now sized at $185 million, down from $200 million, and the revolver is now sized at $200 million, down from $250 million, the spokesman said.

At launch, the revolver and the term loan A were presented to lenders with price talk of Libor plus 275 bps.

Wachovia is the lead bank on the deal that will be used, along with notes, to refinance existing bank debt.

DynCorp is a Falls Church, Va., provider of defense, technical and government outsourced solutions.

Express Energy closes with smaller revolver

Express Energy Services' credit facility (B2/B) closed with a smaller revolver tranche than was originally expected, according to a market source.

The five-year revolver ended up sized at $22.5 million, compared to an initially proposed size at launch of $35 million, the source said.

Pricing on the revolver was left unchanged at Libor plus 525 bps with a 3.25% Libor floor.

As was previously reported, Express Energy's $347.5 million credit facility, down from $360 million, also includes a $325 million five-year first-lien term loan B that is priced at Libor plus 525 bps with a 3.25% Libor floor, was sold at an original issue discount of 98 and carries 101 soft call protection for one year.

Credit Suisse and Lehman acted as the joint lead arrangers on the deal that was used to help fund Macquarie's purchase of a majority interest in the company.

Leverage is around 2.7 times on a run rate basis.

Express Energy is a Houston-based provider of oilfield services.

FoxCo Acquisition closes

FoxCo Acquisition Sub LLC closed on its new $565 million credit facility (B1/BB-), according to a news release.

The facility consists of a $515 million term loan B and a $50 million revolver, with both tranches priced at Libor plus 425 bps.

The term loan B was sold to investors at an original issue discount of 97. The tranche has 101 soft call protection for one year and a 3% Libor floor through Sept. 30, 2009, after which the floor increases to 3.25% from Oct. 1, 2009 through Sept. 30, 2011.

During syndication, the oversubscribed term loan B was upsized from $485 million as the company's bond offering was decreased to $200 million from $230 million.

Deutsche Bank, UBS Securities, Bank of America and BNP Paribas acted as the lead banks on the bank deal, with Deutsche the left lead.

Proceeds from the credit facility and the bonds were used to help fund Oak Hill Capital Partners acquisition of eight FOX network affiliated television stations from News Corp. for about $1.1 billion in cash.

The stations include WJW in Cleveland, KDVR in Denver, KTVI in St. Louis, WDAF in Kansas City, Mo., WITI in Milwaukee, KSTU in Salt Lake City, WBRC in Birmingham, Ala., and WGHP in Greensboro, N.C.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.