FHC Health Systems sets talk; NV Broadcasting, HD Supply break; Tousa heads lower

By Sara Rosenberg

New York, Oct. 26 - FHC Health Systems Inc. came out with price talk on its credit facility as the deal was launched with a bank meeting during Friday's market hours.

In other news, NV Broadcasting LLC (New Vision Television) and HD Supply freed up for trading during the session, with both deals quoted above their original issue discount prices.

Also in trading, Tousa Inc.'s first- and second-lien term loan were softer as some investors were taking profits ahead of the company's upcoming meeting regarding preference issues.

FHC Health Systems held a bank meeting on Friday morning to kick off syndication on its $290 million credit facility, and in connection with the launch, official price talk was announced, according to a market source.

The $10 million five-year cash flow revolver and the $175 million six-year first-lien term were both presented to lenders with talk of Libor plus 350 basis points, and the $85 million 61/2-year second-lien term loan was presented with talk of Libor plus 750 bps, the source said.

Price talk was not available on the $20 million five-year asset-based revolver because that is being held by Merrill Lynch, the source continued.

The asset-based revolver was initially expected to carry a size of $15 million, but it was increased by $5 million prior to the launch.

The first-lien term loan contains 101 soft call protection for one year, and the second-lien term loan contains call protection of 102 in year one and 101 in year two.

Both the first- and second-lien term loans are being offered to investors with an original issue discount of 99.

The official price talk came out in line with the unofficial guidance that was circulating around the market on Thursday.

Covenants under the facility include total leverage, interest coverage and capital expenditures.

Goldman Sachs is the lead bank on the deal, which will be used to help back the buyout of the company by Crestview Partners.

Leverage through the first-lien debt is 2.3 times, and leverage through the second-lien debt is 3.4 times.

Commitments are due from lenders on Nov. 9.

As for the actual bank meeting, that was said to be "well attended" with good questions asked by the participants and a good job done by the company's management, the source added.

FHC Health Systems is a Norfolk, Va., provider of behavioral health care services.

NV Broadcasting frees to trade

Moving to secondary happenings, NV Broadcasting's credit facility allocated and broke for trading, with the $235 million six-year first-lien term loan B (B+) quoted at 99 bid, par offered, according to a market source.

The first-lien term loan is priced at Libor plus 300 bps, was sold to investors with an original issue discount of 98½ and carries 101 soft call protection for one year.

During syndication, the first-lien term loan was upsized from $215 million and the original issue discount was tightened from 98.

NV Broadcasting's $390 million credit facility also includes a $25 million six-year revolver (B+) priced at Libor plus 300 bps, a $100 million seven-year second-lien term loan (CCC+) priced at Libor plus 650 bps and a $30 million senior unsecured holdco loan (CCC+).

The second-lien term loan was sold with an original issue discount of 98 and is non-callable for one year, then at 102 in year two and 101 in year three.

During syndication, the second-lien term loan was downsized from $120 million when the first-lien term loan was upsized.

The first- and second-lien debt contain total leverage and minimum interest coverage covenants.

UBS Investment Bank is the lead bank on the deal, which will be used to help fund New Vision Television's acquisition of Montecito Broadcast Group, LLC and to refinance existing debt.

New Vision Television is a Los Angeles-based owner and operator of television stations.

HD Supply breaks

HD Supply's $1 billion senior secured term loan (Baa1/BBB+) also hit the secondary on Friday, with levels quoted at par 1/8 bid, par 3/8 offered, according to a trader.

The term loan, which is guaranteed by the Home Depot, Inc., is priced at Libor plus 125 bps and was offered at a discount that was tiered based on commitment, the trader said. For example, for a $50 million commitment, investors were given a discount of 993/4.

Merrill Lynch, JPMorgan and Lehman Brothers acted as the lead banks on the deal, which was well oversubscribed.

Proceeds were used to help fund the already completed buyout of the company by Bain Capital Partners, the Carlyle Group and Clayton, Dubilier & Rice from Home Depot for $8.5 billion.

HD Supply is a San Diego-based distributor of construction, industrial and maintenance supplies.

Tousa loses ground

Tousa's first- and second-lien term loans were weaker on Friday as the Sunday meeting to deal with, among other things, preference issues is fast approaching, according to a trader.

The first-lien term loan went out at 97½ bid, 98½ offered, down from 98 bid, 99 offered on Thursday, and the second-lien term loan went out at 92¼ bid, 92¾ offered, down from 93¾ bid, 94¾ offered, the trader said.

The company's revolver was unchanged at 98½ bid, 99 offered.

"There's some profit taking ahead of the Oct. 28 meeting. Still a chance they could file for bankruptcy this weekend. Seems like banks have given them some breathing room if they want it, which I think they would, but there's still a risk," the trader explained.

The breathing room that the banks seem to be giving the company relates to an amendment that is currently being negotiated.

Under the amendment, pricing on the first-lien term loan would be increased to Libor plus 500 bps and the revolver pricing grid would be changed so that pricing can range anywhere from Libor plus 250 bps to Libor plus 525 bps depending on ratings and leverage.

In return, the amendment would fix potential non-compliance with one or more of the covenants under the first-lien term loan and revolver resulting from certain asset impairment charges, deposit write-offs and abandonment charges.

The Hollywood, Fla.-based homebuilder expects significant asset impairment charges in the third quarter due to weaker-than-anticipated net sales orders and declining prices, and significant write-offs and abandonment charges in the third quarter because the company is exercising its right to abandon a number of homesite option contracts due to deteriorating market conditions.

Bausch & Lomb closes

Warburg Pincus completed its leveraged buyout of Bausch & Lomb Inc. for approximately $4.5 billion, including approximately $830 million of debt, according to a news release.

To help fund the buyout, Bausch & Lomb got a new $2.575 billion senior secured credit facility (B1/BB-) consisting of a $500 million six-year revolver priced at Libor plus 325 bps, with a 50 bps commitment fee, a $1.2 billion 71/2-year U.S. term loan priced at Libor plus 325 bps, a $575 million 71/2-year euro equivalent term loan priced at Euribor plus 325 bps and a $300 million 71/2-year delayed-draw term loan priced at Libor plus 325 bps.

The delayed-draw term loan is delayed-draw until Dec. 31, 2009 and carries an unused fee of 100 bps for the first six months, 125 bps for the following six months, 150 bps for months 13 through 18 and 200 bps after that.

The funded U.S. term loan, delayed-draw term loan and euro term loan all carry 101 soft call protection for one year.

The funded U.S. term loan and the delayed-draw term loan were both sold to investors at an original issue discount of 993/4, and the euro term loan was sold at a discount of 991/4.

During syndication, the discount on the U.S. funded and delayed-draw term loans was reduced from 98½ being that the tranches were around 5½ times oversubscribed, the discount on the euro term loan was reduced from 98½ as the tranche was heard to be around three times oversubscribed, and the funded term loan was upsized from $1.1 billion after the company's bond offering was downsized to $650 million from $750 million.

There is a total net leverage covenant and a $350 million accordion feature.

Credit Suisse, Bank of America, Citigroup and JPMorgan acted as the lead banks on the deal.

Bausch & Lomb is a Rochester, N.Y., eye health company.

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