Warner Chilcott breaks; Northwest dips on numbers; Del Labs cuts B; FairPoint price talk emerges

By Sara Rosenberg

New York, Jan. 19 - Warner Chilcott Corp.'s $1.79 billion senior secured credit facility (B) broke for trading on Wednesday, with the term loan B trading in the plus 101 area on the open. Also, watched in the secondary was Northwest Airlines Corp.'s bank debt as the company put out disappointing earnings.

Meanwhile, in the primary Del Laboratories Inc. decreased the size of its term loan B, reverse flexed the tranche and added a step down in pricing. Also, FairPoint Communications Inc. came out with price talk with the deal's launch.

Warner Chilcott's $1.4 billion seven-year term loan B reached a high of 101¼ bid, 101½ offered quickly after opening for trading but then settled back down slightly by the end of the day, according to traders, who said that the B loan was one of, if not the most, active name in the market on Wednesday.

One trader had the paper closing at par 7/8 bid, 101 offered, while a second trader had it closing at 101 bid, 101¼ offered.

"I think there were a lot of flippers out there. Guys buy the paper and flip it quickly to make a profit," one trader said in explanation of why levels dipped toward the end of the session.

The term loan B is priced with an interest rate of Libor plus 275 basis points. Originally, the oversubscribed tranche was sized at $1.25 billion but was upsized by $150 million when the company's bond offering was downsized by the equivalent amount.

Warner Chilcott's facility also contains a $240 million seven-year delayed-draw term loan B with an interest rate of Libor plus 275 basis points and a commitment fee of 137.5 basis points, and a $150 million six-year revolver with an interest rate of Libor plus 250 basis points and a 50 basis point commitment fee.

Deutsche Bank and Credit Suisse First Boston acted as joint lead arrangers and joint bookrunners on the deal with Deutsche the left lead. CSFB is administrative agent, Deutsche is syndication agent, and JPMorgan and Morgan Stanley are co-documentation agents.

Proceeds from the term loan B, along with proceeds from the senior subordinated notes offering, were used to help fund the acquisition of Warner Chilcott plc, which was completed Wednesday, by DLJ Merchant Banking, JP Morgan Partners, Bain Capital and Thomas H. Lee. The delayed draw will be used for product acquisition.

"Warner Chilcott now has the strong financial backing in place to continue executing our growth strategy in the U.S.," said Roger Boissonneault, chief executive officer, in a company news release. "We are well positioned for growth in the women's healthcare and dermatology markets thanks to a strong portfolio of branded products and a strategy of pursuing product development opportunities and opportunistic acquisitions."

Warner Chilcott is a U.K.-based branded pharmaceutical manufacturer and marketer.

Northwest dips on numbers

Northwest's term loan A and term loan B were about an eighth to a quarter of a point lower on Wednesday as the company put out disappointing financials that fell short of analysts' estimates, according to traders.

The term loan A was quoted at par bid, par ½ offered and the term loan B was quoted at 102 bid, 102½ offered, one trader said.

Excluding unusual items, Northwest reported a fourth quarter net loss of $359 million or $4.14 per common share versus the fourth quarter of 2003 when it reported a net loss of $129 million or $1.49 per common share. Analysts expected a fourth quarter loss, excluding unusual items, of $3.97 per share.

Including unusual items, the Eagan, Minn.-based airline company realized a net loss of $420 million or $4.84 per common share compared to the fourth quarter of 2003 when the company reported net income of $363 million or $3.60 per diluted share, including unusual items.

For the full year, Northwest reported a net loss of $878 million or $10.16 per common share, including unusual items, compared to net income of $236 million or $2.62 per diluted share, including unusual items, for 2003.

Excluding unusual items, Northwest reported a full-year net loss of $713 million or $8.25 per common share compared to net loss of $565 million or $6.57 per common share in 2003.

"This was a difficult quarter for Northwest Airlines. Stubbornly high fuel costs, revenue pressures from competitors' pricing actions and labor cost savings realized by some of our major competitors make it imperative that Northwest achieve labor restructuring quickly in order to return to profitability," said Doug Steenland, president and chief executive officer, in a company news release.

Northwest's quarter-ending cash balance was $2.61 billion of which $2.46 billion was unrestricted. This compares to $2.68 billion at the end of the third quarter of which $2.54 billion was unrestricted.

Del Labs reworks B loan

Del Laboratories lowered pricing on its in-market 61/2-year term loan B to Libor plus 225 basis points from Libor plus 275 basis points on Wednesday and added a step down in pricing to Libor plus 200 basis points, based on leverage, according to a market source. Furthermore, the size of the tranche was reduced to $200 million from $210 million.

Meanwhile, the company's senior subordinated notes offering was upsized to $175 million from $150 million and priced at 99.34 with an 8% coupon to yield 8 1/8% - below the 8¼% to 8½% price talk revealed Tuesday as the deal was four times oversubscribed, according to a different market source.

Pricing on the revolver, which is subject to a leverage-based grid, stayed at an initial rate of Libor plus 250 basis points.

As of the start of last week, about two days after launching, the term loan B was already multiple times oversubscribed, making the decision to reduce the spread an unsurprising move.

Some positives about the company include the high amount - about 75% - of sales that come from products it has number one market shares in, it's a relatively low cost producer, it has steady margins and it has an experienced management team.

The term loan is being offered to investors at par, and the revolver is paying an upfront fee of 75 basis points for $7.5 million commitments.

JPMorgan and Bear Stearns are joint lead arrangers and joint bookrunners on the $260 million senior secured credit facility (B1/B). JPMorgan Chase Bank is administrative agent, Bear Stearns Corporate Lending Inc. is syndication agent and Deutsche Bank is documentation agent.

Proceeds from the term loan will be used to help fund the acquisition of Del Laboratories by DLI Holding Corp., a company owned by affiliates of Kelso & Co., in a cash transaction valued at $385 million and a total transaction value of about $465 million, including the assumption of about $80 million of debt.

Proceeds from the revolver will be used to fund continuing operations and other general corporate purposes.

Del Laboratories is a Uniondale, N.Y., manufacturer, marketer and distributor of cosmetics and proprietary over-the-counter pharmaceuticals.

FairPoint sets price talk

FairPoint Communications came out with price talk of Libor plus 225 basis points on both its $100 million revolver due 2011, which is expected to be undrawn at closing, and $590 million term loan due 2012 at Wednesday's bank meeting, according to a market source.

Deutsche Bank, Bank of America, Morgan Stanley and Goldman Sachs are the lead banks on the deal. Credit Suisse First Boston and Wachovia are co-managers.

The company is getting the $690 million senior secured credit facility (B1) in connection with its proposed initial public offering of common stock.

Proceeds from the term loan and the IPO will be used to repay all $185.1 million of existing outstanding bank debt, fund tender offers and consent solicitations for notes, repurchase all series A preferred stock for $130.8 million, repay all $13.6 million of its subsidiaries' outstanding long-term debt and repay the $7 million unsecured promissory note issued in connection with a past acquisition.

Revolver borrowings will be available for working capital and general corporate needs, including permitted acquisitions.

The IPO is contingent on successful completion of the new credit facility.

Last year, FairPoint was expected to do an Income Deposit Securities offering and in connection with that offering, the company planned on getting a $500 million credit facility via Deutsche, consisting of a $100 million revolver with an interest rate of Libor plus 325 basis points and a $400 million term loan with an interest rate of Libor plus 350 basis points.

However, the company opted to cancel its IDS offering and instead sell stock and rework its related financing proposals.

FairPoint Communications is a Charlotte, N.C., rural local-exchange carrier.

Eye Care structure, talk emerges

The structure and price talk on Eye Care Centers of America Inc.'s $190 million senior secured credit facility (B2/B) surfaced Wednesday as the deal launched via a bank meeting to investors.

The facility contains a $25 million five-year revolver talked at Libor plus 275 basis points and a $165 million seven-year term loan B talked at Libor plus 300 basis points, a fund manager said.

Proceeds from the term loan, $163 million of equity and $150 million of senior subordinated notes will be used to fund the acquisition of Eye Care Centers by Golden Gate Capital, Moulin International Holdings Ltd. and management for $450 million.

The revolver is expected to be undrawn at closing.

Following completion of the transaction, senior leverage will be 2.6x and total leverage will be 5x.

"I would imagine it should go okay," the fund manager said based on a preliminary look at the deal. "To start out those pricing levels seem fair [given the leverage]."

JPMorgan is the agent bank on the San Antonio, Texas, retail optical chain's deal. Bank of America and Merrill Lynch are co-syndication agents.

DynCorp well attended

DynCorp International LLC's Wednesday morning bank meeting saw "good attendance" with the deal expected to go well as it's not a complicated business to comprehend and in today's world environment it's a pretty good business to be in, according to a market source.

However, no early commitments were in by mid-afternoon since the bank book had just been posted on the morning of the launch, the source said.

The company is a Fort Worth, Texas, provider of mission critical support to its customers, primarily the U.S. government.

"It's a pretty easy to understand company. The trend is the trend. The government is outsourcing this kind of stuff and they do it," the source explained.

DynCorp's $420 million credit facility (B2) consists of a $345 million term loan B that was launched with opening price talk of Libor plus 250 to 275 basis points and a $75 million revolver that was launched with opening price talk of Libor plus 250 basis points.

The term loan B is being offered to investors at par. Upfront fees on the revolver are 125 basis points for a $25 million commitment, 75 basis points for a $15 million commitment and 50 basis points for a $10 million commitment.

Commitments are due by Jan. 31.

Goldman Sachs and Bear Stearns are the lead banks on the deal, with Goldman the left lead.

Proceeds from the credit facility and a bond offering will be used to help fund Veritas Capital's acquisition of DynCorp from Computer Sciences Corp. for $850 million, with $775 million in cash payable at closing plus $75 million of senior preferred stock. The acquisition is expected to be completed in the first quarter of 2005.

Corel nets early orders

Corel Corp. got "a couple of tickets" in on its newly launched $95 million five-year first-lien term loan B (B), which was a surprisingly good start for the deal since some anticipated that investors would need more time to do their credit work before being comfortable with the company, according to a market source.

"[They] had a good turnout. Like 10 accounts showed up and there were a lot of people on the phone," the source said.

"It's a software company with no assets and pretty significant turnaround in the last 12 months," the source added, explaining that the opening price talk was meant to reflect any potential investor concerns and the deal only being rated by one agency - Standard & Poor's.

The term loan B, which is being offered at par, is talked at Libor plus 375 basis points.

Corel's $165 million credit facility also contains a $55 million 51/2-year second-lien term loan (CCC+) with price talk of Libor plus 725 basis points and a $15 million five-year revolver (B) with price talk of Libor plus 375 basis points and a 50 basis point commitment fee.

The second-lien term loan is also being offered at par but contains call protection of 103 in year one, 102 in year two and 101 in year three.

Currently, the syndicate is considering offering 50 basis points for any size revolver commitment, the source said.

Commitments are due Feb. 2.

Credit Suisse First Boston is the sole lead arranger on the deal that will be used to pay a dividend to the sponsor, Vector Capital.

Corel is an Ottawa, Canada-based provider of software solutions.

Energy Transfer Partners closes

Energy Transfer Partners LP closed on its new $700 million senior unsecured revolving credit facility, according to a company news release. Wachovia was the lead bank on the deal.

The revolver, which had been upsized from $500 million during syndication, is priced with an initial interest rate of Libor plus 150 basis points.

Borrowings under the revolver, along with proceeds from a senior unsecured notes offering, were being used to help refinance substantially all of the outstanding debt under the existing secured credit facilities of La Grange Acquisition LP.

Future borrowings under the revolver are available to finance internal construction projects and other future expansion opportunities of the company's midstream and transportation business.

"By completing this refinancing, the Partnership has substantially reduced its exposure to rising interest rates and has also deferred principle payments on $750 million of its indebtedness to 2015. In addition, the new credit facility will finance foreseeable future capital needs," the news release added.

Energy Transfer Partners is a Tulsa, Okla., owner and operator of a diversified portfolio of energy assets.

© 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.