Mark IV revises structure; Quality Home Brands, Fairmont set talk; Alon USA overfills after pricing tweak

By Sara Rosenberg

New York, May 18 - Mark IV Industries Inc. presented its new deal to lenders Thursday with a slightly different structure than previously expected as the company decided to go ahead with a full on refinancing of its term loan B as opposed to just doing an add-on.

Also in the primary, Quality Home Brands and Fairmont Hotels & Resorts Inc. came out with price talk on their credit facilities as both deals launched during Thursday's market hours. And, Alon USA Energy Inc.'s term loan has reached oversubscription as pricing on the tranche was recently modified.

Mark IV Industries launched its deal on Thursday with a total of $899 million in new term loan debt, up from $295 million, as the existing term loan B is now going to be taken out instead of just being upsized, according to a market source.

Under the revised proposal, the company is looking to get a $729 million first-lien institutional term loan (B1/BB) due June 2011 that is talked at Libor plus 250 to 275 basis points and a $170 million 51/2-year second-lien term loan (B3/BB-) that is talked at Libor plus 600 to 625 basis points, the source said.

Originally, the company was only planning on doing a $125 million add-on to its existing $604 million term loan -which carries pricing of Libor plus 300 basis points - but plans changed to rolling the existing debt into a new term loan that is expected to carry lower pricing, the source explained.

So far, the transaction has been well received by the market as some orders started piling in even before the Thursday morning bank meeting, with more coming in after the launch, the source added.

The second-lien term loan contains soft call protection of 102 in year one and 101 in year two on voluntary prepayments.

Bear Stearns, JPMorgan and Credit Suisse are joint lead arrangers and joint bookrunners on the deal, with Bear Stearns administrative agent on the second-lien loan and JPMorgan administrative agent on the term loan B add-on.

Proceeds from the incremental term loan debt will be used to fund a tender offer and consent solicitation for the company's $250 million of 7½% senior subordinated notes due 2007, which expires on June 13.

The company's existing $150 million revolver and euro term loan are remaining in place as is.

Mark IV is an Amherst, N.Y., maker of engineered systems and components for transportation infrastructure, vehicles and equipment.

Quality Home Brands price talk

Quality Home Brands announced opening price talk levels at its bank meeting on Thursday afternoon, with the $30 million six-year revolver and the $270 million 61/2-year first-lien term loan launched at Libor plus 250 basis points and the $120 million seven-year second-lien term loan launched at Libor plus 650 to 675 basis points, according to a market source.

The second-lien term loan contains call protection of 101 for one year.

Bear Stearns and BNP Paribas are the lead banks on the $420 million credit facility, with Bear Stearns the left lead.

Proceeds will be used to fund the acquisition of a lighting company and to refinance existing bank debt.

Quality Home Brands is a Bronx, N.Y., lighting fixtures, ceiling fans and decorative products company.

Fairmont spread talk

Fairmont released price talk on its term loan B and term loan C tranches on Thursday in conjunction with the holding of a general syndication bank meeting, according to a market source.

The $465 million term loan B was launched with opening price talk of Libor plus 325 basis points and the $300 million five-year term loan C was launched with opening price talk of Libor plus 600 basis points that is pay-in-kind for two years and then reverts to cash pay, the source said.

Fairmont's $3.7175 billion credit facility also contains a $300 million revolver talked at Libor plus 135 basis points and a $2.6525 billion term loan A talked at Libor plus 135 basis points.

The pro rata portion of the credit facility was already launched to senior managing agents in April, and since that time a significant amount of commitments has come in for the debt, the source added.

Citigroup, Credit Suisse and Eurohypo are the lead banks on the deal, with Citi the left lead. And, RBC and SMBC have signed on to the deal as co-documentation agents.

Proceeds from the credit facility are being used to help fund the recently completed purchase of Fairmont by Kingdom Hotels International and Colony Capital at a price of $45 per share in cash.

In connection with the acquisition, Kingdom and Colony combined the Fairmont and Raffles Hotels & Resorts portfolios, transforming the companies into a luxury global hotel leader with 120 hotels in 24 countries. Fairmont remains an independent hotel management and ownership company with headquarters in Toronto, and Raffles, based in Singapore, also retains its independent brand identity.

Alon attracts strong demand

Alon USA's $450 million seven-year senior secured term loan B has reached the point of oversubscription as the syndicate recently revised pricing higher because of the B2 rating that was received from Moody's Investors Service, according to a market source.

The term loan is priced with an interest rate of Libor plus 250 basis points after being flexed up from original talk at launch of Libor plus 225 basis points.

The original price talk was based on assumed ratings of B1/B+. At first, the syndicate left the original talk alone since the combination of Standard & Poor's BB- rating and the Moody's B2 rating essentially equaled out to the assumed rating levels. However, earlier this week it was decided that pricing should come up by 25 basis points based on the Moody's rating.

Credit Suisse is the lead bank on the deal that will be used to help fund the acquisitions of Paramount Petroleum Corp. and Edgington Oil Co.

Under the Paramount acquisition agreement, Alon USA will pay $307 million for all equity interests in Paramount and assume about $100 million of debt, net of cash.

Under the Edgington acquisition agreement, Alon USA will pay about $52 million in cash plus an amount to be determined for the value of inventory.

Leverage on a net basis is expected to be in the range of 50%.

Alon USA is a Dallas-based independent refiner and marketer of petroleum products. Paramount Petroleum is a Paramount, Calif.-based manufacturer, producer and distributor of asphalt products. Edgington is a Long Beach, Calif.-based heavy crude refining company.

Thomas Nelson upsizes, cuts spreads

Thomas Nelson Inc. increased the size of its term loan B and at the same reduced pricing on the B loan tranche as well as on the revolver, according to a market source.

The six-year term loan B is now sized at $205 million, up from an original size of $195 million, and pricing on the tranche was lowered to Libor plus 225 basis points from original talk at launch of Libor plus 250 basis points, the source said.

Meanwhile, pricing on the $30 million five-year revolver (size unchanged) was also reverse flexed to Libor plus 225 basis points from original talk at launch of Libor plus 250 basis points, the source continued. The revolver carries a 50 basis point commitment fee.

Credit Suisse is the lead bank on the deal.

Proceeds from the credit facility, along with unsecured mezzanine debt, will be used to help fund the company's public-to-private transaction through a buyout by InterMedia Partners VII LP - which will be contributing equity for the transaction.

In connection with the term loan B upsizing, the amount of equity being used for the deal was reduced by $10 million, the source added.

Under the agreement, each outstanding share of Thomas Nelson common stock and class B common stock will be converted into the right to receive $29.85 in cash. The total consideration to be paid to Thomas Nelson stockholders and option holders is about $473 million.

The transaction, which is expected to be completed by June 30, is subject to approval by the holders of at least two thirds of the votes of Thomas Nelson's common stock and class B common stock, voting together as a single class, and to other customary closing conditions, including appropriate clearance under the Hart-Scott-Rodino Act.

Thomas Nelson is a Nashville, Tenn., publisher and distributor of products emphasizing Christian, inspirational and family value themes.

Professional Paint tweaks deal

Professional Paint Inc. made some changes to its credit facility, upsizing the first-lien term loan, downsizing the second-lien term loan, and lowering pricing on all tranches, according to a market source.

The first-lien term loan is now sized at $213 million, up from an original size of $205 million, and pricing was reverse flexed to Libor plus 225 basis points from Libor plus 250 basis points, the source said.

As for the second-lien term loan, that is now sized at $43.5 million, down from an original size of $48.8 million, and pricing was reverse flexed to Libor plus 575 basis points from Libor plus 625 basis points, the source continued.

Lastly, pricing on the $75 million revolver (size unchanged) was lowered to Libor plus 225 basis points from Libor plus 250 basis points as well, the source added.

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

Merrill Lynch is the lead bank on the deal that will be used to refinance existing bank debt and fund the acquisition of a paint supplier in Florida.

The increase in the total amount of debt being used is a result of the company having to pay a little bit more for the acquisition because audited financials showed that the paint supplier had higher EBITDA than was originally outlined.

Professional Paint is a Lone Tree, Colo., manufacturer and distributor of architectural paints and coatings.

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