Solutia dips on refinancing; HCA continues to rise; Ford inches up; BioScrip sets OID

By Sara Rosenberg

New York, March 2 - Solutia Inc.'s term loan headed lower during Tuesday's trading session after the company announced that it will be refinancing the debt by getting a new senior secured credit facility.

Also in trading, HCA Inc.'s term loan debt was once again better as investors were still reacting to the paydown news that emerged late in the previous session, and Ford Motor Co.'s old term loan was stronger following the release of sales results.

In other loan happenings, BioScrip Inc. firmed up the original issue discount on its credit facility, and Munder Capital Management set talk on its credit facility as the deal was launched to investors.

Solutia slides with refi

Solutia's term loan lost some ground in trading following news that the debt would be repaid from borrowings under a new credit facility, according to traders.

The term loan was quoted by one trader at 101 bid, 101½ offered, down from Monday's levels of 101¼ bid, 101¾ offered, and by a second trader at par 7/8 bid, 101 3/8 offered, down from 101¼ bid, 101¾ offered.

The first trader explained that the term loan moved down to the 101 level, as opposed to par, on the paydown news since that is the current call protection.

On Tuesday morning, Solutia announced that it will be coming to market with a $1.05 billion senior secured credit facility that will be used to refinance the existing senior secured term loan facility due in February 2014 and the existing senior secured ABL facility due in February 2013.

Solutia may also fund acquisition

In addition to the refinancing, proceeds from Solutia's proposed credit facility could be used to help fund the recently announced acquisition of Etimex Solar GmbH, a supplier of ethylene vinyl acetate encapsulants to the photovoltaic market, from Etimex Holding GmbH for €240 million.

The company plans to sell $300 million of senior notes due in 2020 that could be used to fund the Etimex Solar purchase as well.

Specifically, the company said that the notes proceeds will be used for general corporate purposes which may include funding acquisitions, such as the Etimex Solar transaction, and the repayment of debt.

The Etimex Solar acquisition was announced on Monday, at which time all that was revealed was that Solutia would get new debt financing and use cash on hand for the deal.

Closing on the Etimex Solar transaction is expected to take place in the second quarter, subject to customary conditions, including receipt of governmental approvals.

Solutia lead banks

Solutia's proposed credit facility is being done by joint lead arrangers and joint bookrunners Deutsche Bank, Jefferies, Citigroup, HSBC Securities and JPMorgan.

The facility will be launched to investors through a bank meeting that is set to take place on Thursday.

Tranching on the new deal is comprised of a $300 million revolver due in 2015 and a $750 million term loan due in 2017.

Price talk on the facility is not yet available, a market source told Prospect News.

Solutia is a St. Louis-based performance materials and specialty chemicals company.

HCA trades up

HCA's term loans continued to gain ground in the secondary market on the back of Monday's late-day announcement that some of the debt will be repaid, according to traders.

The term loan A was quoted by one trader wrapped around 96, up a quarter of a point on the day, by a second trader at 96 bid, 96¼ offered, up from 94½ bid, 95 offered, and by a third trader at 95 7/8 bid, 96 1/8 offered, up from 95½ bid, 96¼ offered.

In addition, the company's term loan B was quoted by the first trader wrapped around 961/2, also up a quarter of a point on the day, by the second trader at 96 3/8 bid, 96 5/8 offered, up from 95 bid, 95½ offered, and by the third trader at 96 3/8 bid, 96 5/8 offered, up from 96 bid, 96½ offered.

HCA selling bonds

Late Monday, HCA announced that it will be selling $1 billion of senior secured first-lien notes and that, as required by its senior secured credit facility, proceeds from the notes will be used to repay term loans.

Immediately after the news came out, one trader told Prospect News that HCA's term loan A moved to 95¼ bid, 96 offered from 94½ bid, 94 7/8 offered and its term loan B moved to 95¾ bid, 96¼ offered from 95 1/8 bid, 95½ offered.

However, because the announcement came out so late, some other traders did not see any real movement on the loans until Tuesday.

Furthermore, on Tuesday, the company upsized the bond offering to $1.4 billion, resulting in a 16% paydown across pro rata, up from 11%, one trader remarked, which is another reason the term loans kept moving higher.

HCA is a Nashville-based owner and operator of hospitals and surgery centers.

Ford strengthens

Ford's old term loan was a little better in trading after the company revealed February sales numbers that showed an improvement from the previous year, according to a trader.

The old term loan was quoted at 94¼ bid, 94¾ offered, up from 94 bid, 94½ offered, the trader said.

However, the company's new term loan was unchanged on the news with levels quoted at 92½ bid, 93½ offered, the trader added.

For the month of February, Ford reported total sales of 142,285, up 43.1% from 99,400 in February 2009.

Total car sales for the month were 53,241, up 53.5% from 34,678 in the prior year.

And, total truck sales for the month were 46,199, up 36.1% from 33,934 in the 2008 comparable period.

Ford is a Dearborn, Mich.-based manufacturer and distributor of automobiles.

BioScrip firms discount

Over in the primary market, BioScrip set the original issue discount on its $150 million five-year credit facility (Ba3/BB-) at 98, according to a market source.

Pricing on the facility is Libor plus 400 basis points with a 2% Libor floor - in line with initial talk.

Tranching on the deal is comprised of a $50 million revolver, which is expected to be substantially unfunded at close, and a $100 million term loan.

Jefferies is the lead bank on the facility that will be used to help fund the acquisition of Critical Homecare Solutions (CHS), a provider of home infusion and home health agency services to patients suffering from chronic and acute medical conditions.

BioScrip plans notes

BioScrip is also expected to issue $225 million of senior notes, which are backed by a $225 million bridge loan commitment from Jefferies, for acquisition funding.

The purchase price for CHS is $343.2 million in cash and stock. The consideration will include cash of $242 million, including about $132 million to repay CHS' debt, and the issuance of $101.2 million of common stock. And, BioScrip will also issue 3.4 million warrants with a $10.00 exercise price and five-year term to CHS shareholders.

In 2010, the combined company is expected to generate revenues of about $1.67 billion to $1.73 billion, gross profit of $267 million to $277 million, or about 16% percent of sales, and adjusted EBITDAO of $67 million to $71 million.

Closing on the acquisition is expected by April 1, subject to approval of BioScrip's stockholders and regulatory approvals.

BioScrip is an Elmsford, N.Y.-based specialty pharmaceutical health care organization.

Munder talk surfaces

Munder Capital launched its $85 million credit facility with price talk of Libor plus 400 bps with a 2% Libor floor and an original issue discount of 98, according to a market source.

Tranching on the deal is comprised of a $5 million revolver and an $80 million term loan.

Credit Suisse is the lead bank on the credit facility that will be used to refinance existing debt.

Munder is a Birmingham, Mich.-based provider of investment advice and asset management services.

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