FHC Health Systems floats early guidance; Hoffmaster cuts spread; Hanesbrands lower on numbers; TXU dips

By Sara Rosenberg

New York, Oct. 25 - FHC Health Systems Inc. early unofficial price talk began making its way around the market as the deal is getting ready to launch with a bank meeting on Friday, and Hoffmaster reduced pricing on its term loan B.

Meanwhile, in trading, Hanesbrands Inc.'s term loan was softer after disappointing third-quarter numbers were released and Texas Competitive Electric Holdings Co. LLC (TXU) saw it term loan fall off slightly.

Also in the secondary, Tousa Inc.'s first- and second-lien bank debt were a touch lower as people are waiting to see how the amendment plays out and LCDX came in with light volume.

FHC Health Systems saw some very early unofficial pricing guidance surface on its credit facility as investors are awaiting the Friday bank meeting that will launch the deal into syndication, according to a market source.

Talk is that the $175 million six-year first-lien term loan is being unofficially guided at Libor plus 350 basis points and that the $85 million 61/2-year second-lien term loan is being unofficially guided at Libor plus 750 bps, the source said.

In addition, early indications are that the first-lien term loan and the second-lien term loan will both be offered to investors with an original issue discount of 99, the source remarked.

However, no formal price talk or original issue discount information has been announced as of yet, another source added, saying that the official terms will come out at the bank meeting.

FHC Health Systems' proposed $285 million credit facility also includes a $15 million five-year asset-based revolver and a $10 million five-year cash flow revolver.

Goldman Sachs is the lead bank on the deal, which will be used to help back the buyout of the company by Crestview Partners.

FHC Health Systems is a Norfolk, Va., provider of behavioral health care services.

Hoffmaster reverse flexes

Hoffmaster lowered the spread on its $140 million term loan B to Libor plus 350 bps from original talk at launch of Libor plus 375 bps, according to a market source.

The original issue discount on the term loan B was left unchanged at 99, the source added.

The company's $170 million credit facility also includes a $30 million revolver.

National City Bank is the lead bank on the deal.

Proceeds were used to help fund the recently completed buyout of the company by Kohlberg & Co. LLC from Solo Cup Co. for about $170 million.

Hoffmaster is a manufacturer of specialty napkins, placemats, table covers and other items for the restaurant and lodging industries.

Alliant Insurance ups term B size

Alliant Insurance Services Inc. upsized its term loan B to $385 million from $360 million after the company downsized its bond deal to $265 million from $290 million, according to a market source.

In addition, the original issue discount on the term loan B was reduced to 98¼ from 98, while pricing was left unchanged at Libor plus 300 bps, the source said.

Alliant Insurance's now $445 million (up from $420 million) credit facility (B2/B-) also includes a $60 million revolver.

JPMorgan and UBS are the lead banks on the already funded deal.

Proceeds were used to fund the already completed acquisition of the company by the Blackstone Group and management and employees from Lindsay Goldberg.

The credit facility had originally been launched to investors in July, with the term loan B talked at Libor plus 275 bps, but syndication was put on hold due to market conditions.

Alliant is a Newport Beach, Calif., insurance brokerage firm.

MSCI retranches, readies allocations

MSCI Inc. reworked the tranching on its credit facility, resulting in a $50 million upsizing to the overall deal size, lowered the original issue discount on its term loan B and is getting ready to give out allocations next week, according to a market source.

Under the changes, the revolver was increased to $75 million from $50 million, the term loan A was increased to $200 million from $150 million and the term loan B was decreased to $225 million from $250 million, the source said.

In addition, the term loan B is now being offered to investors with an original issue discount of 99½ as opposed to at 99, the source remarked.

Pricing on the pro rata is unchanged at Libor plus 250 bps, and pricing on the term loan B is unchanged at Libor plus 300 bps.

Morgan Stanley and Bank of America are the lead banks on the now $500 million (up from $450 million) senior secured credit facility (Ba2/BB+).

The facility is being done in connection with an initial public offering of common stock.

Proceeds will be used to repay intercompany debt owed to Morgan Stanley.

MSCI is a New York-based provider of investment decision support tools to investment institutions.

Hanesbrands slips with earnings

Moving to the secondary, Hanesbrands' term loan was a bit weaker on Thursday after the company announced third-quarter results, according to a trader.

The term loan ended the day at 98¾ bid, 99¾ offered, down about a quarter of a point from previous levels, the trader said.

For the quarter, Hanesbrands reported diluted earnings per share of $0.40 versus $0.52 a year ago and diluted earnings per share excluding actions were $0.48, compared with $0.75 a year ago.

Also for the quarter, total net sales increased by 3.1% to $1.15 billion and operating profit increased to $105.7 million from $93.9 million a year ago.

For the nine months ended Sept. 30, diluted earnings per share were $0.79 versus $1.91 a year ago and diluted earnings per share excluding actions were $1.29 versus $2.33 a year ago.

In addition, for the first nine months of the year, total net sales increased by 1.3% to $3.32 billion and operating profit decreased to $262.7 million from $270 million a year ago.

Hanesbrands is a Winston-Salem, N.C.-based marketer of innerwear, outerwear and hosiery apparel.

Texas Competitive slides

Texas Competitive Electric Holdings' term loan B-2 was a bit weaker during the trading session, likely because "some flippers were pushing it down," according to a trader.

The Dallas-based energy company's term loan B-2 ended the day at par bid, par 1/8 offered, down from par ¼ bid, par 3/8 offered, the trader said.

"There was a little bit of action in the morning. Not as much action as yesterday," the trader remarked.

The term loan B-2 freed up for trading during Wednesday's session, with trading volume well into the triple digits. The debt first hit the secondary at par ¼ bid, par ½ offered, traded as high as par 5/8 plus, and then settled in at par ¼ bid, par 3/8 offered.

Tousa softens on amendment concerns

Tousa's first- and second-lien term loans moved lower in trading as market players are watching to see if the company's proposed amendment ends up passing, according to a trader.

The first-lien term loan went out at 98 bid, 98½ offered, down from 98½ bid, 99 offered on Wednesday, and the second-lien term loan went out at 93¾ bid, 94¾ offered, down from 94 bid, 95 offered, the trader remarked.

The company's revolver was unchanged at 98½ bid, 99 offered.

"There's a lot of different ways that this can play out over the next couple of days. Bigger holders seem to be saying that they have enough for approval [of the amendment] but I don't think anything has been signed. If you own the loan, I don't see why you wouldn't want this to pass but if you own a big slug of the bonds and you want them to file you wouldn't let it go through. Uncertainty is if there's cross ownership," the trader said.

On Wednesday, the Hollywood, Fla.-based homebuilder said that it is seeking an amendment because it anticipates that recording certain asset impairment charges, deposit write-offs and abandonment charges will cause it to breach one or more of the covenants under the first-lien term loan and revolver.

Asset impairment charges are expected in the third quarter due to weaker-than-anticipated net sales orders and declining prices, and write-offs and abandonment charges are expected in the third quarter because the company is exercising its right to abandon a number of homesite option contracts due to deteriorating market conditions.

Under the amendment, pricing on the first-lien term loan would be increased to Libor plus 500 bps and the revolver pricing grid would be changed so that pricing could range anywhere from Libor plus 250 bps to Libor plus 525 bps depending on ratings and leverage.

LCDX loses ground

LCDX was weaker during Thursday's market hours with very light volume seen by traders.

The LCDX 9 was quoted at 98.80 bid, 98.90 offered, down from 99.10 bid, 99.20 offered, the trader said, adding that there was very light volume in the index.

Stocks, on Thursday, were a mixed bag with Nasdaq down 23.90 points, or 0.86%, Dow Jones Industrial Average down 3.33 points, or 0.02%, S&P 500 down 1.48 points, or 0.10%, and NYSE up 20.25 points, or 0.20%.

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