Chrysler Financial breaks; Jarden withdrawn, existing loan trades down; Source Interlink funds, pulls from syndication

By Sara Rosenberg

New York, Aug. 1 - Chrysler Financial's multi-billion credit facility freed up for trading on Wednesday morning, with the first-lien term loan quoted in the upper-90s region and the second-lien term loan quoted in the mid-90s region.

In other happenings, Jarden Corp. has decided not to syndicate its new term loan, although the debt will still be funded, and has withdrawn the amendment to its existing bank facility. In reaction to this news, Jarden's existing term loan headed lower in trading since lenders will no longer be getting a bump up in spreads.

Meanwhile, Source Interlink Cos. Inc.'s credit facility has been taken out of the primary market, but, like Jarden, the banks are funding the deal.

Chrysler Financial's credit facility broke for trading first thing Wednesday morning, after allocating late the night before, with the first-lien term loan going out around the 97 area and the second-lien term loan going out around the 95 area, according to traders.

More specifically, one trader had the first-lien at 96¾ bid, 97¼ offered, while a second trader had it at 97 bid, 97½ offered and a third trader had it at 97 bid, 98 offered.

As for the second-lien, one trader had it at 94½ bid, 95½ offered, a second trader had it at 94 bid, 95 offered and a third trader had it at 94¼ bid, 95¼ offered.

In the morning, the first-lien term loan had been quoted at 96 3/8 bid, 97 3/8 offered and the second-lien term loan had been quoted at 94¼ bid, 95¼ offered, another source added.

The $4 billion five-year first-lien term loan B (B1/BB-/BBB-) is priced at Libor plus 400 basis points, with call protection of 103 in year one, 102 in year two and 101 in year three, and was issued with an original issue discount of 95.

On Tuesday night, call protection on the first-lien was changed from just 102 in year one and 101 in year two and the discount firmed up from revised indications of somewhere in the 95 to 96 area.

Earlier on in syndication, pricing on the first-lien term loan B was flexed up from revised talk of Libor plus 300 bps and original talk at launch of Libor plus 275 bps, call protection had already been modified once before from just 101 in year one and the paper was originally going to be sold at par, then at 99½ OID and then at 99, before settling at the final discount level.

The $2 billion six-year second-lien term loan (B2/CCC+/BB) is priced at Libor plus 650 bps, with call protection of 103 in year one, 102 in year two and 101 in year three, and was also issued with an original issue discount of 95.

On Tuesday night, the discount on the second-lien also firmed up from revised indications of somewhere in the 95 to 96 area.

Earlier on in syndication, pricing on the second-lien term loan was flexed up from revised talk of Libor plus 550 bps and from original talk at launch of Libor plus 500 bps, call protection was modified from just 102 in year one and 101 in year two, and the paper was originally going to be sold at par, then at 99 and then at 981/2, before settling at the final discount level.

The company's $8 billion credit facility also includes a $2 billion five-year ABL revolver (B1/BB-) that is priced at Libor plus 400 bps.

The ABL and the first-lien term loan share the same collateral and the same covenants.

During syndication, pricing on the revolver was flexed up from revised talk of Libor plus 300 bps and original talk at launch of Libor plus 275 bps.

JPMorgan, Citigroup, Goldman Sachs, Bear Stearns and Morgan Stanley are the joint bookrunners on the deal, with JPMorgan, Citigroup and Goldman Sachs the joint lead arrangers.

Proceeds will be used to help fund the buyout of the provider of financial services for vehicles in the NAFTA region by Cerberus Capital Management LP from DaimlerChrysler AG.

Jarden pulls loan from primary

Jarden has pulled its $700 million incremental term loan B (Ba3/BB-) from the primary market, but the debt will still be funded, just by Lehman Brothers, the sole lead bank, who will likely try to sell some of it down at a later time, according to a market source.

In addition, the company withdrew its amendment request that would have, among other things, repriced the existing institutional term loan, currently at Libor plus 175 bps, in line with the new term loan. Lenders were going to be paid a 25 bps amendment fee.

The amendment was not necessary for the company to get the incremental term loan debt because it has room under the accordion feature in the existing credit agreement for the funding, which is what it will now use.

It is currently unclear as to what the final terms, such as pricing, will be on the new term loan B now that it is just being funded by the bank, the source added.

Most recently, while in market, the incremental term loan B was being talked at Libor plus 250 bps, with 101 soft call protection for one year and an original issue discount of 993/4.

During syndication, the term loan was upsized from $500 million after a $400 million ABL revolver that was being talked at Libor plus 125 bps, with a 25 bps unused fee, was eliminated from the capital structure, pricing was lifted from original talk of Libor plus 200 bps, and the soft call and discount were added.

Because the ABL revolver didn't get done, the company's existing $200 million revolver is staying in place as is, instead of being taken out.

Proceeds from the new term loan B will be used to fund the acquisition of K2 Inc. and to repay about $316 million of K2 debt.

Under the terms of the agreement, Jarden will pay $10.85 per share of K2 common stock in cash and will issue 0.1086 of a share of Jarden common stock for each share of K2 common stock.

The transaction is subject to Hart-Scott-Rodino approval, the approval of K2's stockholders and other customary closing conditions.

K2, a Carlsbad, Calif., designer, manufacturer and distributor of sporting equipment and recreational products, will hold its stockholder meeting on Aug. 8.

Jarden trades lower

Following the news that Jarden pulled its amendment, its existing term loan fell off by a couple of points as the debt will be remaining at current pricing, according to a trader.

The term loan ended the day at 93 bid, 95 offered, down from Tuesday's levels of 95 bid, 97 offered, the trader said.

As mentioned above, the amendment would have increased pricing on the existing term loan to match that of the new term loan debt, meaning that had the new deal been done at proposed terms, existing lenders would have received new pricing of Libor plus 250 bps, up from the current pricing of Libor plus 175 bps.

In addition, the existing lenders would have also received a 25 bps amendment fee, so they actually would have gotten a total of 100 bps extra with this transaction.

Jarden is a Rye, N.Y., provider of niche consumer products used in and around the home.

LCDX moves higher

In more trading news, LCDX gained some ground on Wednesday on market technicals, according to a trader.

The index went out at 93.30 bid, 93.75 offered, up from Tuesday's closing levels of 91.80 bid, 92.10 offered, the trader said.

"Maybe there's some short covering today," the trader added in explanation of the positive movement.

Source funds, pulled from syndication

Source Interlink's $1.18 billion credit facility is being taken down by the lead banks as it was pulled from the primary market, with the expectation being that those banks will try to sell some of it off over time, according to a market source.

The deal, which funded on Wednesday, consists of an $880 million seven-year term loan B (B1/B+) and a $300 million six-year ABL revolver (Ba3/BB-).

During syndication, the term loan B was being talked at Libor plus 300 bps, after flexing up from Libor plus 250 bps, and the ABL revolver was being talked at Libor plus 150 bps.

The deal included a senior secured leverage ratio that was added during syndication, under which the leverage ratio was set at 6.5 times for the fiscal quarter ending October 2008, 6.0 times for the fiscal quarters ending January 2008 and April 2009, 5.75 times for the fiscal quarters ending July 2009 and October 2009, 5.5 times for the fiscal quarters ending January 2009 and April 2010, 5.25 times for the fiscal quarters ending July 2010 and October 2010, 5.00 times for the fiscal quarters ending January 2010 and April 2011, 4.75 times for the fiscal quarters ending July 2011 and October 2011, and 4.5 times for each fiscal quarter after that.

Citigroup and JPMorgan acted as the lead banks on the deal.

Proceeds from the credit facility were used to help fund the acquisition of Primedia Inc.'s Enthusiast Media division for $1.178 billion in an all-cash transaction, the closing of which was announced on Wednesday,

The Enthusiast Media division is comprised of over 70 magazine titles and 90 web sites.

Source Interlink is a Bonita Springs, Fla., provider of merchandising and fulfillment services for home entertainment products.

Technical Olympic closes

Technical Olympic USA Inc. closed on its $1.2 billion credit facility, according to a company news release.

The facility consists of a $700 million revolver priced at Libor plus 375 bps, a $200 million first-lien term loan (B2/B-) priced at Libor plus 375 bps, with 101 soft call protection in years one and two, and a $300 million second-lien PIK toggle term loan (Caa2/CCC-) priced at Libor plus 725 bps, with call protection of non-callable for one year, then at 102 in year two and 101 in year three.

If PIK pricing is elected on the second-lien loan, pricing bumps up by 75 bps.

During syndication, the pricing on the revolver and first-lien term loan was flexed up from original talk at launch of Libor plus 350 bps, the second-lien pricing was flexed up from original talk of Libor plus 650 bps and second-lien call premiums were changed from just 102 in year one and 101 in year two.

Citigroup acted as the lead arranger, bookrunner and administrative agent on the deal.

Proceeds were used to fund settlements related to the Transeastern joint venture, including the repayment of Transeastern's $335 million senior term loan debt and $65 million revolver debt, $51 million to purchase certain land bank assets, $36 million of interest, financing fees and expenses, and $13 million as cash on the balance sheet.

As part of the settlement, Transeastern became wholly owned by the company and merged into one of its subsidiaries.

The company also issued to Transeastern's senior mezzanine lenders $20 million in aggregate principal amount of 14¾% senior subordinated PIK election notes due 2015 and 8% series A convertible preferred PIK preferred stock with an initial aggregate liquidation preference of $117.5 million.

In addition, the company issued warrants to Transeastern's junior mezzanine lenders to purchase shares of its common stock. The warrants have an estimated fair value of $16.25 million at issuance, subject to certain previously described terms.

"With the completion of our financing and the global settlement, we can put the Transeastern JV issues behind us. Having eliminated the cost, management distraction, and potential adverse outcome of protracted lender litigation, we can now focus all of our efforts on operating in this difficult housing market, strengthening our balance sheet and enhancing value for TOUSA stakeholders," Antonio B. Mon, president and chief executive officer, said in the release.

"Much hard work remains for us to execute our plan to de-leverage our balance sheet and actively manage our assets during one of the most challenging housing markets in many years," Mon continued. "Our associates understand our objectives and are experienced and capable of meeting the challenges posed by the current difficult market conditions while preparing for an eventual housing recovery."

Technical Olympic is a Hollywood, Fla., designer, builder and marketer of single-family residences, town homes and condominiums.

EPD closes

EPD Inc., an entity sponsored by Carlyle Partners IV, LP, completed its acquisition of the Goodyear Tire & Rubber Co.'s engineered products business for $1.475 billion, subject to certain post-closing adjustments, according to a news release.

To help fund the transaction, EPD got a new $1.26 billion senior secured credit facility that consists of a $100 million six-year multi-currency revolver (B1/B+) priced at Libor plus 250 bps, an $800 million seven-year first-lien term loan (B1/B+) priced at Libor plus 250 bps that was sold to investors with an original issue discount of 99½ and a $360 million eight-year second-lien term loan (Caa1/CCC+) priced at Libor plus 575 bps that was sold to investors at a discount of 98½ and carries call protection of 102 in year one and 101 in year two.

Of the total first-lien term loan amount, $100 million is delayed draw for 12 months.

During syndication, the funded first-lien term loan was upsized from $650 million; funded term loan, delayed-draw term loan and revolver pricing firmed up at the wide end of talk of Libor plus 225 bps to 250 bps; the original issue discount was added to the first-lien term debt; and a leverage covenant that opens at 5.75 times, with step downs over time, was added to the first-lien as well.

Also during syndication, the second-lien term loan was downsized from $410 million, the original issue discount was added and pricing firmed up at the wide end of talk of Libor plus 550 bps to 575 bps.

Lehman Brothers, JPMorgan and Goldman Sachs acted as the joint lead arrangers and joint bookrunners on the deal.

EPD is an Akron, Ohio, manufacturer of hoses, conveyor belts and power transmission belts, as well as tank tracks for military and off-road vehicles.

Terremark closes

Terremark Worldwide, Inc. closed on its $250 million credit facility, according to a company news release.

The facility consists of a $150 million first-lien term loan due July 2012 priced at Libor plus 375 bps and a $100 million second-lien term loan due January 2013 priced at Libor plus 775 bps with a PIK interest component of 450 bps.

The second-lien term loan is non-callable for one year, then at 102 in year two and 101 in year three.

Credit Suisse acted as the lead bank on the deal.

A portion of the proceeds were used to pay down all of the company's existing secured debt and the remainder will be used to fund capital expenditures to support its data center expansion plans.

Terremark is a Miami-based operator of carrier-neutral integrated internet exchanges and a provider of managed IT infrastructure solutions.

Bisys Crump closes

JC Flowers completed its acquisition of Bisys' insurance services group and retirement services business and combined it with its existing commercial insurance business, Crump, according to a news release.

To help fund the deal, Bisys Crump got a new $555 million credit facility (B2/B+) that consists of a $40 million revolver and a $515 million term loan.

As was previously reported, this deal is being funded by the underwriters and then they will try to sell down what they can, when they can.

Wachovia, Citigroup and Bear Stearns acted as the lead banks on the deal.

During syndication, the two tranches were being talked at Libor plus 300 bps, after being revised from original talk at launch of Libor plus 225 bps.

Spirit closes

Macquarie Bank Ltd., Kaupthing Bank hf. and other independent equity participants completed their buyout of Spirit Finance Corp. for $14.50 per common share, according to a news release.

To help fund the deal, Spirit got a new $850 million six-year term loan B (B2/B) priced at Libor plus 300 bps.

During syndication, quarterly maintenance covenants were added to the loan.

Credit Suisse acted as the lead arranger on the deal.

Spirit is a Scottsdale, Ariz., real estate investment trust focused on single-tenant, operationally essential real estate.

Primedia closes

Primedia Inc. closed on its $350 million senior secured credit facility (Ba3/BB), according to a news release.

The facility consists of a $100 million six-year revolver priced at Libor plus 200 bps and a $250 million seven-year term loan priced at Libor plus 225 bps, with 101 soft call protection for one year and an original issue discount of 98.

During syndication, the revolver pricing was increased from Libor plus 175 bps, term loan pricing was increased from Libor plus 200 bps and the call protection and discount were added to the term loan.

Furthermore, during syndication, the accordion feature was changed to $125 million for the first year and $175 million after that, from an original size of $200 million.

Lastly, the total leverage maintenance test was reduced to 5.25 times from 6.00 times, the source added.

Credit Suisse, Bank of New York, Lehman Brothers and Citigroup acted as the lead banks on the deal.

Proceeds from the facility, along with proceeds from the sale of its Enthusiast Media business, are being used to repay existing debt, fund a one-time dividend of about $96 million to shareholders and provide access to additional growth capital.

Primedia is a New York-based media company.

© 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.