CACI bid lower as S&P changes rating outlook to negative

By Sara Rosenberg

New York, June 1 - CACI International Inc.'s term loan B fell by about a point on the bid side primarily in reaction to Standard & Poor's decision to revise the outlook on the company's debt to negative from stable.

The paper was quoted at 97½ bid, 99½ offered, according to a few traders. By comparison, one trader saw the paper quoted at 99 bid, par offered last Thursday, while another trader saw the paper quoted slightly lower at the end of last week at 98½ bid, 99½ offered.

While S&P revised the outlook, it also affirmed its BB corporate credit and senior secured debt ratings on the company.

"The revised outlook reflects concerns stemming from five investigations into the company's work for the Department of Defense in Iraq, including the U.S. Army's use of CACI employees for the interrogation of Iraqi prisoners, which may have fallen outside the scope of CACI's information technology contract," said S&P credit analyst Ben Bubeck in the rating release.

"The General Services Administration will determine whether CACI violated any rules and if so, if remedies should include suspension or debarment from future government contracts, which currently comprise more than 90% of the company's revenue base," the release continued.

"Although CACI's revenues from Iraq are a small part of its total business, and bans from government business typically occur only in cases of extreme impropriety, a decision by the General Services Administration to ban CACI from future government contracts would impair the company's business profile and likely result in a downgrade. CACI is cooperating in the investigation and stated that it has not knowingly acted inappropriately and will correct any inadvertent errors. If the various investigations conclude favorably for the company, the outlook may be returned to stable, given operating trends to date," the release concluded.

CACI is an Arlington, Va., international information systems and high technology services corporation.

FairPoint set for Wednesday

A bank meeting for FairPoint Communications Inc.'s proposed $450 million credit facility (B2) has been set for Wednesday, according to a market source. Deutsche, CIBC and Citigroup are the lead banks on the deal, with Deutsche listed on the left.

The facility, which is being obtained in connection with the initial public offering of the company's Income Deposit Securities (IDS), consists of a $100 million revolver and a $350 million term loan.

Proceeds from the term loan, combined with proceeds from the $750 million IDS offering, will be used to repay all outstanding loans under the existing credit facility and to fund the repurchase of all outstanding senior notes and senior subordinated notes.

More specifically, $817.3 million will be used to repay existing debt, $113.2 million will be used to repurchase series A preferred stock, $10.5 million will be used as a cash reserve for discontinued operations and $159 million will be used for other purposes.

In addition, in connection with the IDS offering, the company expects to issue about $361.4 million principal amount of senior subordinated notes to the public and its existing equity holders.

FairPoint is a Charlotte, N.C., provider of telecommunications services.

Jean Coutu now July business

It is now anticipated that Jean Coutu Group Inc.'s proposed credit facility will likely hit the market after July 4 as opposed to the previous expectation that the deal would be June business, according to a market source.

Deutsche, National Bank of Canada and Merrill Lynch will lead the U.S. portion of the credit facility, with Deutsche on the left.

National Bank of Canada, Deutsche and Merrill Lynch will lead the Canadian portion of the credit facility, with National Bank of Canada on the left.

The credit facility is fully committed and contains pretty standard covenants, company officials previously revealed during a conference call.

Proceeds from the credit facility, combined with proceeds from a 10-year high-yield notes offering, will be used to fund the Jean Coutu's acquisition of the Eckerd drugstores for $2.375 billion from J.C. Penney Co. Inc.

Of the total debt financing, high-yield bonds are expected to be about 40% of the debt, and the average interest rate on the total debt is expected to be a little bit more than 6%.

Debt over EBITDA will be around 4.6 times.

The acquisition is subject to government review and approvals, and the concurrent sale of the remaining Eckerd drugstores to CVS Corp. by J. C. Penney. The transactions are expected to close by the end of J.C. Penney's fiscal second quarter.

On Tuesday, J. C. Penney announced that the Federal Trade Commission completed its review of the sale of its Eckerd drugstore operations to Jean Coutu and CVS and granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

Jean Coutu is a Longueuil, Quebec-based drugstore chain.

VCA closes

VCA Antech Inc. closed on its new $225 million senior term loan E (Ba3/BB-) with an interest rate of Libor plus 225 basis points, according to a company news release. Goldman Sachs and Wells Fargo were the lead banks on the deal, with Wells Fargo acting as administrative agent.

Originally, the term loan E was launched with an interest rate of Libor plus 250 basis points but was reverse flexed during syndication.

Proceeds from the term loan E were used to refinance the company's $145.3 million term loan D that carried an interest rate of Libor plus 250 basis points and to finance the acquisition of National PetCare Centers Inc.

The company also has a $50 million revolver with an interest rate of Libor plus 275 basis points.

"I am pleased that as a result of our strong operating performance and the recent upgrade of our senior secured credit rating by Moody's and Standard and Poor's to Ba3 and BB-, respectively, we were able to lower our interest rate by 25 basis points. We appreciate Goldman Sachs' and Wells Fargo Bank's efforts in arranging this successful refinancing," said Bob Antin, chairman and chief executive officer, in the release.

VCA is a Los Angeles animal healthcare services company.

Church & Dwight closes

Church & Dwight Co. Inc. closed on its $640 million amended and restated credit facility (Ba2/BB), consisting of a $100 million five-year revolver with an interest rate of Libor plus 175 basis points, a $100 million five-year term loan A with an interest rate of Libor plus 175 basis points and a $440 million seven-year term loan B with an interest rate of Libor plus 200 basis points.

The term loan B can be increased by an additional $250 million under certain conditions, according to an 8-K filed with the Securities and Exchange Commission on Tuesday.

JPMorgan and Citigroup were the lead banks on the deal with JPMorgan listed on the left.

Syndication of the facility only went out to existing Church & Dwight and Armkel lenders.

Proceeds from the term loans were used to help fund the purchase of Kelso & Co.'s 50% interest in Armkel LLC, repay Armkel's existing credit facility and refinance Church & Dwight's credit facility.

The revolver, which is undrawn, is available for general corporate purposes.

Church & Dwight is a Princeton, N.J., developer, manufacturer and marketer of consumer and specialty products.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.