Valeant kicks off $5.55 billion; Fortescue meeting Friday; loan funds see $196 million outflows

By Paul A. Harris

Portland, Ore., March 5 – Bank loans were pretty well bid on Thursday, according to a trader.

“Things had been pretty much all one way,” said the trader.

“But this week and last week we went away from all one-way to a more two-way market, with people taking profits and adjusting portfolios.

“The primary market is picking up,” the trader added, “but we're not seeing a lot of huge deals yet.”

Dedicated bank loan funds saw $196 million of outflows for the week to Wednesday's close.

Outflows have been the story, the trader said but added that lately the negative flows seem to be slowing to a halt.

In the new issue market, Valeant Pharmaceuticals International Inc. set a Monday bank meeting for $5.55 billion of incremental term loan debt.

And Fortescue Metals Group set a bank meeting Friday morning to roll out about $7.39 billion of bank loan debt.

Valeant’s $5.55 billion

Valeant Pharmaceuticals set a Monday bank meeting for $5.55 billion of incremental term loan debt (Ba1/BB), according to a market source.

The term loan debt is split between a $1 billion incremental five-year term loan A and a $4.55 billion seven-year incremental term loan B.

Deutsche Bank Securities Inc., HSBC Securities (USA) Inc., Bank of Tokyo-Mitsubishi UFJ Ltd., DNB Markets Inc. and SunTrust Robinson Humphrey Inc. are the joint lead arrangers and bookrunners.

Pricing remains to be determined.

Proceeds, along with proceeds from the issuance of $9.6 billion of senior notes, will be used to fund the acquisition of Salix Pharmaceuticals Ltd. for $158 per share in cash, or a total enterprise value of about $14.5 billion.

Closing is expected in the second quarter, subject to customary conditions and regulatory approval.

Valeant is a Laval, Quebec-based specialty pharmaceutical company. Salix is a Raleigh, N.C.-based developer and marketer of prescription pharmaceutical products and medical devices for the prevention and treatment of gastrointestinal diseases.

Fortescue meeting Friday

Australia's Fortescue Metals Group set a bank meeting Friday morning to roll out about $7.39 billion of bank loan debt, according to an informed source.

The deal, which is being led by Credit Suisse Securities (USA) LLC, is comprised of a new $2.5 billion seven-year senior secured term loan and a $4,888,000,000 tack-on that will extend its existing term loan due June 30, 2019 to a seven-year maturity.

Both tranches are talked with 425 to 450 basis points Libor spreads with 1% Libor floors.

The new term loan is talked at 99. Investors will roll into the extension at par and receive a 25 bps fee.

Both tranches have 12 months of soft call protection at 101.

Commitments for the tack-on are due on March 13. Commitments for the new loan are due on March 18.

Proceeds will be used to extend the term loan maturity and refinance senior notes.

The borrowing entities are Fortescue Resources, FMG America and FMG Finance, Inc., wholly owned subsidiaries of the East Perth, Australia-based iron ore producer.

C&J Energy details

C&J Energy Services, Inc., issuing via CJ Holding Co. (Delaware), outlined $1.06 billion of term loans, a market source said on Thursday.

Included is a $510 million five-year senior secured term loan B-1 with drawn margin of Libor plus 550 bps and a $550 million term loan B-2 with drawn margin of Libor plus 625 bps.

Both tranches have 1% Libor floors and 1% annual amortizations.

Commitments are due on March 13.

Citigroup Global Markets Inc.is the lead left arranger. BofA Merrill Lynch is the administrative agent, as well as an arranger. Wells Fargo Securities LLC and JPMorgan are arrangers.

Capital One, Comerica, Amegy, Regions, BNS and DNB are co-managers.

The B-1 tranche is secured by all of the capital stock and intercompany notes of each credit party (limited to 100% of the non-voting capital stock and 65% of the voting capital stock of certain excluded subsidiaries).

The B-2 tranche is secured by all of the tangible and intangible properties and assets of each credit party.

The B-1 tranche is callable at 104 in year one and par thereafter. The B-2 tranche is callable at 105 and 103 in years one and two, respectively, and par thereafter.

Proceeds will be used to finance the proposed combination with Nabors Industries' completion and production services business.

C&J Energy is a Houston-based provider of hydraulic fracturing, coiled tubing, cased-hole wireline, pumpdown and other oilfield services.

Freif price talk

Freif NAP I Holdings III LLC set price talk for $295 million of seven-year term loans, a market source said on Thursday.

The deal, comprised of a $250 million term loan B and a $45 million term loan C, is talked with a Libor spread in the 375 bps area with a 1% Libor floor at 99.

The term loans have 101 soft call protection for one year.

Amortization is 1% per annum.

Commitments are due March 19.

Deutsche Bank, Citigroup, Macquarie Capital (USA) Inc. and Credit Suisse are the bookrunners on the deal.

Proceeds will be used to refinance existing debt and fund the acquisition of power facilities.

Freif is an owner of power generation assets.

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