Rayovac bank deal downsized, investors expecting flex; Builders FirstSource reschedules bank meeting

By Sara Rosenberg

New York, Jan. 21 - Rayovac Corp. downsized its term loan B on Friday as it priced an upsized bond offering, and investors are now awaiting a reverse flex on the tranche as the deal was so popular that the books were actually shut down a week and a half early. In other primary news, Builders FirstSource Inc. pushed off the launch of its $375 million credit facility (B1/B+).

Rayovac reduced the size of its U.S. term loan B tranche to $540 million from $740 million as the company opted to price an upsized $700 million bond offering at the high end of price talk, according to a market source. The U.S. term loan B is still talked at Libor plus 225 to 250 basis points - for now.

The bond deal, which was increased from $500 million, priced at par to yield 7 3/8%. Price talk was 7 1/8% to 7 3/8%.

Institutional investors are expecting to see Rayovac come out with some sort of pricing reduction from original talk on its term loan B as the tranche is - and has been for a while now - multiply oversubscribed, according to a buyside source.

In fact, the deal received such an overwhelming amount of demand that the syndicate closed the books down this past Wednesday even though originally the commitment deadline wasn't scheduled until Jan. 28, the source added.

The now $730 million term loan B also contains a euro tranche in the equivalent of $140 million talked at Libor plus 275 basis points and a Canadian dollar tranche in the equivalent of $50 million talked at Libor plus 225 to 250 basis points.

There were a couple of factors working in favor of this deal, with one of the key components being that Rayovac and the soon-to-be-acquired company, United Industries Corp., each have existing, relatively large, loan lender groups - giving the new deal the potential for a lot of rollover commitments.

In addition, Rayovac has a good acquisition history, with management able to come through on synergy and cost saving promises, a source previously explained to Prospect News.

Rayovac is acquiring United Industries for a total value of about $1.2 billion including the assumption of about $880 million of United Industries debt - comprised of senior debt and senior subordinated notes - that will be redeemed or replaced and a cash tax benefit of $140 million.

In addition to helping fund the acquisition, proceeds from the facility will also be used to refinance Rayovac's existing credit facility.

The $700 million senior subordinated notes via Bank of America, Citigroup and Merrill Lynch will be used to help fund the acquisition as well. Rayovac's existing bonds will remain outstanding following the acquisition, so the newly capitalized company will have $850 million senior subordinated notes outstanding.

The transaction, which is expected to close in February, is subject to approval under the Hart-Scott-Rodino Anti-trust Improvements Act and other customary closing conditions.

Rayovac's approximately $1.03 billion credit facility (B1/B+) also contains a $300 million revolver talked at Libor plus 225 basis points.

Bank of America, Citigroup and Merrill Lynch are the lead banks on the credit facility, with Bank of America the left lead.

Rayovac is an Atlanta-based consumer products company and one of the largest battery, shaving and grooming, and lighting companies.

United Industries is a St. Louis-based manufacturer and marketer of consumer products for lawn and garden care and household insect control. Currently 83% of United is owned by Thomas H. Lee Equity Fund IV. It is anticipated that following the transaction Thomas H. Lee will hold an ownership position in Rayovac of about 25%.

Builders FirstSource resets launch

Builders FirstSource's proposed credit facility is now scheduled to launch via a bank meeting on Tuesday instead of launching this past Friday as was previously expected, according to a fund manager.

"I don't think it's anything. Probably just a scheduling conflict," the fund manager added.

The facility consists of a $110 million five-year revolver talked at Libor plus 250 basis points, a $250 million six-year first-lien term loan talked at Libor plus 275 basis points and a $15 million six-year prefunded letter-of-credit facility talked at Libor plus 275 basis points.

UBS and Deutsche Bank are the lead banks on the deal, with UBS the left lead.

Proceeds will be used to pay a $237 million dividend and repay existing debt.

The company is also expected to issue $250 million in second-lien senior secured floating-rate notes.

Builders FirstSource is a Dallas supplier of building products to professional, large-scale homebuilders.

© 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.