Psychiatric Solutions up on buyout bid; Quad/Graphics sets talk; HHI, Diamond Foods ready deals

By Sara Rosenberg

New York, March 10 - Psychiatric Solutions Inc.'s term loan B gained some ground during Wednesday's trading hours after news surfaced that the company has been approached about being acquired.

Over on the new deal front, Quad/Graphics Inc. came out with price talk on its acquisition financing credit facility as the deal was presented to investors during the session, and HHI Holdings LLC firmed up timing on its credit facility.

In other news, Diamond Foods Inc. is getting ready to kick off the retail syndication round on its pro rata credit facility, talk is that Ardent Health Services LLC's credit facility filled out following the recent changes that were made, and Fresenius SE wrapped syndication on its term loan.

Psychiatric Solutions rises

Psychiatric Solutions' term loan B was stronger in trading as it was revealed that there are third parties interested in buying the company, according to a trader.

Psychiatric Solutions also announced that in order to consider possible responses, it has formed a special committee of the board of directors, which has retained Goldman Sachs & Co. as its financial advisor and Shearman & Sterling LLP as its legal advisor.

The company does not expect to make further public comments regarding the buyout bid unless and until it enters into a definitive agreement or determines that none will be pursued, a news release said.

Following the news, the company's term loan B was quoted at 98 bid, 99 offered, up from 97¼ bid, 97¾ offered, the trader said.

Psychiatric Solutions is a Franklin, Tenn., provider of inpatient behavioral health care services.

Most of BWIC trades

Market talk is that almost all of the $298 million Bid Wanted In Competition traded on Wednesday as bids were due at 10 a.m. ET, according to a trader.

The trader also remarked that he heard only about five names in the BWIC did not trade.

Quad/Graphics talk emerges

Switching to the primary market, Quad/Graphics held a bank meeting on Wednesday to launch its proposed $1.2 billion credit facility (Ba2/BB+) to lenders, and in connection with the event, price talk was announced, according to a market source.

Both the $400 million four-year cash-flow revolver and the $800 million six-year term loan B are being talked at Libor plus 350 basis points with a 1.5% Libor floor, the source said.

And, the term loan B is being offered at an original issue discount of 99, the source continued.

JPMorgan and U.S. Bank are the lead banks on the facility, with JPMorgan committing $1.05 billion of the deal and U.S. Bank committing $150 million.

Quad/Graphics funding acquisition

Proceeds from Quad/Graphics' credit facility will be used to help fund cash distributions in connection with the acquisition of World Color Press Inc., refinance its existing revolver, refinance World Color's existing debt, and fund the repayment of certain other World Color obligations.

Under the transaction agreement, each World Color common share will be converted after a multi-step transaction into a number of class A common shares of Quad/Graphics at a share exchange ratio to be determined at closing.

Simultaneously with the closing, $140 million will be distributed in cash to Quad/Graphics' existing common shareholders, and Quad/Graphics will also provide at least $93.3 million to World Color to purchase any warrants not converted to common shares and to fund redemptions of or payments due on any other equity securities not converted to common shares.

Quad/Graphics is a Sussex, Wis.-based printer of catalogs, magazines and other commercial products. World Color is a Montreal-based provider of print, digital and related services.

HHI launching Thursday

HHI Holdings has nailed down timing on its proposed credit facility by scheduling a bank meeting for Thursday, according to a market source. Talk of potential timing had been floating around for a while, with the expectation at some point even being that the deal was going to come in late February.

The facility includes an ABL revolver and term loan, with tranche sizes not yet available, the source said. Details are expected to be announced at the meeting.

When the deal was first announced, it was expected that the ABL revolver would be $140 million and the term loan would be $240 million (B3/B+). However, investors were later told that the term loan would likely be smaller than that originally anticipated amount.

Bank of America and Credit Suisse are the lead banks on the deal that will be used to refinance existing debt and fund a dividend.

HHI is a Royal Oak, Mich.-based supplier of highly engineered metal forgings and machined components, wheel bearings, and powdered metal engine and transmission components.

Diamond Foods sets retail round

Diamond Foods has scheduled a bank meeting for Monday to launch the retail syndication of its $600 million five-year secured credit facility, according to a market source.

The source explained that there was an agent round that already resulted in the full subscription of the deal, but now those agents are selling down some of their commitments.

Bank of America and Barclays are the joint lead arrangers and bookrunners on the credit facility, with Bank of America the administrative agent. Barclays, Rabobank and Bank of Montreal are the syndication agents.

Proceeds from the facility, which is dated as of Feb. 25, will be used to help fund the pending acquisition of Kettle Foods, a maker of potato chips, from Lion Capital LLP for $615 million in cash and to repay existing debt.

Other financing is coming from the company's recent sale of around 5 million shares of its common stock, which generated proceeds of about $181 million.

Diamond Foods structure

As was previously reported, Diamond Foods' credit facility consists of a $200 million revolver and a $400 million term loan A, with both tranches initially priced at Libor plus 350 bps. The spread can range from Libor plus 225 bps to 350 bps based on leverage.

The revolver has a 50 bps commitment fee initially. This fee can drop to 37.5 bps based on leverage.

Amortization on the term loan is $40 million per year, beginning in the fiscal quarter ending July 31.

Covenants include a maximum consolidated leverage ratio of not more than 4.75 to 1.00, reducing annually over the term of the facility to reach 3.25 to 1.00 on April 30, 2014, and a minimum fixed-charge coverage ratio of 1.10 to 1.00 through Oct. 30, 2012, 1.20 to 1.00 through Oct. 30, 2013, and 1.25 to 1.00 through maturity.

Diamond Foods is a San Francisco-based packaged foods company.

Ardent gets done

Market chatter is that Ardent Health's credit facility was able to fill out as a result of the changes that were announced on Tuesday, according to a market source.

Under the term loan changes, the tranche was downsized to $325 million from $400 million, pricing was raised to Libor plus 500 bps from Libor plus 450 bps, with the 1.5% Libor floor left unchanged, the original issue discount was increased to 98 from 981/2, and call protection was changed to 102 in year one and 101 in year two from just 101 in year one previously.

Bank of America, Barclays and GE Capital are the lead banks on the $400 million deal, which also includes a $75 million revolver.

Proceeds will be used to fund a dividend payment - the size of which was reduced with the term loan downsizing - and to refinance existing debt.

Ardent Health is a Nashville, Tenn.-based operator of acute care hospitals and specialty care facilities.

Fresenius shuts books

Fresenius closed the books on its term loan C, comprised of an approximately $996 million tranche and a roughly €165 million tranche, on Wednesday, and the target is to give out allocations later this week, according to a market source.

The term loan C is priced at Libor plus 300 bps with a step down to Libor plus 275 bps after March 31, 2011 if leverage is 3.5 times or less.

There is a 1.5% Libor floor and 101 soft call protection for one year, and the loan was sold at par.

During syndication, the step down in pricing was added and the Libor floor was reduced from 1.75%.

Fresenius led by Deutsche

Deutsche Bank is the lead bank on Fresenius' new term loan C that will be used to refinance the existing term loan B that is priced at Libor plus 350 bps with a 3.25% Libor floor.

The term loan C will mature in September 2014, the same maturity as the existing term loan B.

All existing term loan lenders are getting 100 bps, which is the existing call protection and consenting lenders to the amendment that was launched in conjunction with the term loan C will also get 25 bps.

Fresenius is a Bad Homburg, Germany-based provider of products and services for individuals undergoing dialysis.

Denbury closes

Denbury Resources Inc. closed on its $1.6 billion four-year senior secured revolving credit facility, according to a news release.

JPMorgan and Bank of America acted as the co-arrangers on the deal. The debt financing commitment initially came from JPMorgan.

Proceeds were used to help fund the acquisition of Encore Acquisition Co. in a transaction valued at roughly $4.5 billion, including the assumption of debt and the value of the minority interest in Encore Energy Partners LP.

The combined Plano, Texas-based exploration and production company is known as Denbury Resources.

After draws to fund the acquisition, about $600 million to $700 million is still available under the credit facility.

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