Rural/Metro upsizes term loan B and letter-of-credit facility, reduces pricing across the board

By Sara Rosenberg

New York, Feb. 28 - Rural/Metro Corp. made a round of changes to its in-market credit facility, increasing the overall size by $35 million and lowering pricing on all tranches - with the most significant price cuts seen in the institutional pieces.

Rural/Metro increased its term loan B due 2011 to $135 million from $120 million after the operating company priced a senior subordinated note offering that was downsized to $125 million from $140 million, according to a market source. The notes priced at par to yield 9 7/8%.

Rural/Metro - the holding company - also priced a new bond offering on Monday. The size of the senior discount notes issuance remained unchanged at $93.5 million face value, with the deal pricing at 53.699 to yield 12¾%.

In addition to upsizing the term loan B, Rural/Metro upsized its institutional letter-of-credit facility due 2011 to $35 million from $15 million to gain extra liquidity, the source said.

Pricing on both the term loan B and the institutional letter-of-credit facility was significantly lowered, with spreads moving to Libor plus 250 basis points from original price talk of Libor plus 350 basis points.

Furthermore, pricing on the $20 million revolver due 2010 (size left unchanged) was lowered to Libor plus 325 basis points from original price talk of Libor plus 350 basis points, the source continued.

Recommitments from lenders are due on Wednesday, with closing on the facility targeted for Friday, the source added.

Rural/Metro plans to use the now $190 million senior secured credit facility (B2/B) and the new bond debt to help fund the tender offer for its $150 million 7 7/8% senior notes due 2008 and repay revolver debt.

Citigroup and JPMorgan are the lead banks on the credit facility, with Citigroup the left lead.

Rural/Metro is a Scottsdale, Ariz., provider of emergency and non-emergency medical transportation, fire protection and other safety services.

American Safety ups loan size, cuts pricing

American Safety Razor Co. increased the overall size of its credit facility by $15 million by shifting some funds from its second-lien term loan into its first-lien term loan and adding some additional debt to the first-lien term loan. Furthermore, spreads were reduced on both its first-and second-lien term loans, according to a market source.

The seven-year first-lien term loan (B2/B) was increased to $225 million from $200 million and pricing on the tranche was reverse flexed to Libor plus 275 basis points from Libor plus 300 basis points, the source said.

Meanwhile, the 71/2-year second-lien term loan (Caa1/CCC+) was decreased to $77.5 million from $87.5 million and pricing on the tranche was reverse flexed to Libor plus 625 basis points from Libor plus 675 basis points.

The company's $25 million five-year revolver (B2/B) that is priced at Libor plus 300 basis points was left unchanged in terms of both size and pricing.

Proceeds from the credit facility will be used to refinance existing debt and pay a dividend. The size of the dividend payment is being slightly increased through the loan upsizing.

UBS is the lead bank on the deal. The changes were made to the credit facility late last week.

American Safety Razor, a J.W. Childs Associates LP portfolio company, is a Verona, Va., manufacturer of personal care consumer products primarily consisting of shaving razors and blades.

Liberty Group closes

Liberty Group Operating Inc. closed on its new $330 million senior secured credit facility (B2/B) consisting of a $50 million six-year revolver and a $280 million seven-year term loan B with an interest rate of Libor plus 225 basis points and a step down to Libor plus 200 basis points if operating company leverage falls below 3.5x.

Originally, the term loan B was launched with price talk of Libor plus 275 basis points but was reverse flexed with the addition of a step down during syndication.

On Monday, Liberty borrowed $4 million under its revolver and $100 million under the term loan B to repay in full the existing credit facility and to terminate the obligations of the company and Liberty Group Publishing Inc.

Furthermore, the term loan draw will pay for the March 30 redemption of the company's 11 5/8% senior discount debentures and the March 15 redemption of the company's 14¾% senior redeemable exchangeable cumulative preferred stock.

Liberty plans to draw down the remaining $180 million of term loan B debt on March 30 to fund the redemption of the company's 9 3/8% senior subordinated notes, a company news release said.

Wells Fargo was the lead bank on the deal and administrative agent, U.S. Bank acted as syndication agent and CIT Lending Services Corp. acted as documentation agent.

Liberty Group is a Northbrook, Ill., publisher of community newspapers.

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