SRAM, Web Service tweak deals; JBS, SunGard, Ashland float talk; Masonite, Spirit Aero dip

By Sara Rosenberg

New York, Sept. 9 - In new deal happenings Tuesday, SRAM raised pricing on its credit facility and decided to do away with plans for a retail bank meeting based on the demand that was received during an early syndication round, and Web Service Co. raised both pricing and the original issue discount on its bank deal.

Also in the primary, JBS USA came out with guidance on its proposed credit facility that is slated to launch later on in the week, SunGard Data Systems Inc. released price talk on its incremental term loan, and price talk on Ashland Inc.'s upcoming credit facility also emerged.

Over in the secondary market, Masonite International Inc.'s term loan lost some ground as the company held a lender call, Spirit AeroSystems Inc.'s term loan weakened on the back of the company's update regarding the strike at the Boeing Co., and LCDX 10 dropped with equities.

SRAM ups pricing

SRAM made some changes to its $265 million credit facility (Ba3/B+) and being that the deal is oversubscribed from an early bird marketing period, the agent bank opted to cancel the retail bank meeting that was formerly anticipated to occur this week, according to a market source.

Under the revisions, both the $25 million revolver and the $240 million term loan are now priced at Libor plus 500 basis points, up from original talk of Libor plus 475 bps, the source said.

As before, the revolver and the term loan carry a 3% Libor floor and were sold to investors at an original issue discount of 98.

Allocations on the credit facility are targeted to go out later this week.

GE Capital is the lead bank on the deal that will be used, along with $110 million of mezzanine debt, to fund Lehman Brothers Merchant Banking's acquisition of a minority interest in the company.

The transaction is expected to close in late September.

SRAM is a Chicago-based bike components company.

Web Service lifts pricing, OID

Also coming out with modifications was Web Service, as it flexed pricing higher on its $235 million credit facility and widened the original issue discount, according to a market source.

Both the $50 million six-year revolver and the $185 million six-year term loan are now priced at Libor plus 500 bps, up from initial talk of Libor plus 450 bps, and both were sold to investors at an original issue discount of 97, up from 98, the source said.

Unchanged was the Libor floor on the deal, which is still set at 3%.

With the revisions, the deal is oversubscribed, the source added.

GE Capital is the lead bank on the facility that is being used to help fund the buyout of the company by Code, Hennessy & Simmons LLC.

On Tuesday, Ares Capital Corp. announced that it closed $50 million out of the total $100 million senior subordinated notes facility for the buyout.

Senior leverage is around 3.1 times and total leverage is around 4.97 times.

Web Service is a Redondo Beach, Calif., laundry service provider, serving multi-housing locations, including apartment properties, condos, college and university residence halls and military bases.

JBS floats talk

Meanwhile, on the topic of price talk, JBS USA started circulating guidance on its proposed $1.25 billion credit facility that is scheduled to launch to investors with a bank meeting on Thursday at 2 p.m. ET, according to market sources.

The $500 million six-year term loan is being talked at Libor plus 550 bps with a 3.25% Libor floor and an original issue discount of 97, and the $750 million five-year ABL revolver is being guided in the area of Libor plus 250 bps to 275 bps, sources said.

Credit Suisse and GE Capital are the lead banks on the deal, with Credit Suisse the left lead on the term loan and GE the left lead on the revolver.

Proceeds will be used to help fund the acquisitions of Smithfield Beef Group Inc. and National Beef Packing Co. LLC by parent company JBS SA.

JBS SA is purchasing Smithfield Beef, a beef processing and cattle feeding operation, from Smithfield Foods Inc. for $565 million in cash.

National Beef is being bought by JBS SA from U.S. Premium Beef LLC for $465 million in cash and $95 million in common stock. In addition, JBS will assume all of National Beef's debt and other liabilities at closing.

JBS USA is a meat processing and packaging company.

SunGard price talk

Also coming out with price talk Tuesday was SunGard Data Systems, as the company held a conference call on to kick off syndication on its proposed $300 million incremental senior secured term loan, according to a market source.

The incremental term loan is being talked at Libor plus 375 bps with a 3% Libor floor and an original issue discount in the area of 98 to 99, the source said.

Pricing on the company's existing term loan will remain at Libor plus 175 bps and the Libor floor will not apply to this debt, the source continued.

"I think there will be a lot of interest from existing lenders to participate in the upsize," the source added.

Commitments are due from lenders on Sept. 15.

Goldman Sachs and Citigroup are the joint lead arrangers on the term loan, with Goldman the left lead, and Goldman, Citi and Lehman Brothers are the bookrunners and underwriters. KKR Capital Markets is also an underwriter.

Proceeds will be used to help fund the acquisition of a majority stake in GL Trade and for general corporate purposes, including the refinancing of the company's existing 3¾% senior secured notes due Jan. 15, 2009.

Other financing will come from $700 million of senior unsecured bonds, which are backed by a commitment for a $700 million senior unsecured bridge loan. The bonds are expected to have terms and conditions and covenants substantially consistent with those relating to the company's 2013 notes.

Under the transaction, SunGard has made a binding offer and entered into final discussions with GL Trade's main shareholders to acquire a block of shares representing, directly and indirectly, 64.51% of GL Trade's share capital at a price of €41.70 per share.

Immediately following completion of the transaction, SunGard intends to launch an all-cash tender offer for the remainder of GL Trade's share capital at the same price of €41.70 per share.

Closing is expected during the fourth quarter of the year, subject to clearance by the relevant competition authorities.

SunGard is a Wayne, Pa.-based provider of software and processing products for the financial services, higher education and the public sector. GL Trade is a Paris-based financial software services company.

Ashland guidance surfaces

Ashland was yet another company to release price talk on its $1.75 billion senior secured credit facility as timing on the deal was narrowed down to a Monday retail bank meeting from previously being labeled as next week's business, according to a market source.

The $500 million five-year revolver and the $500 million five-year term loan A are both being talked at Libor plus 325 bps, and the $750 million seven-year term loan B is being talked at Libor plus 350 bps, the source said.

By comparison, according to filings with the Securities and Exchange Commission, pricing on the revolver and term loan A were said to be expected at Libor plus 275 bps, and pricing on the term loan B was said to be expected at Libor plus 325 bps.

The filings also said that the facility would carry a 3% Libor floor.

In addition, under the commitment letter, the term loan A was sized at $600 million and the term loan B was sized at $850 million. However, as was allowed under the letter, the company decided to replace $100 million of the term loan A and $100 million of the term loan B with an accounts receivable securitization facility.

Financial covenants include a maximum leverage ratio and a minimum fixed-charge coverage ratio.

Bank of America and Scotia Capital are the joint lead arrangers and joint bookrunners on the credit facility, with Bank of America the administrative agent.

Proceeds from the credit facility, along with $750 million of senior unsecured notes, will be used to help fund the acquisition of Hercules Inc. for $18.60 per share in cash and 0.093 of a share of Ashland common stock. The total transaction value is about $3.3 billion, including $0.7 billion of net assumed debt.

Ashland anticipates refinancing Hercules' existing bank debt and 6¾% notes in connection with the acquisition.

Upon close, Ashland will have pro forma combined revenue for the 12 months ended March 31 of more than $10 billion, including about $3.5 billion generated outside North America. For the same period, Ashland generated EBITDA of $365 million excluding certain items, while Hercules reported ongoing EBITDA of $392 million excluding certain items.

Closing is expected to occur by the end of the year, subject to the approval of Hercules' shareholders, the receipt of regulatory approvals and other customary conditions.

At close, debt to EBITDA is estimated to be in the area of 3.2 times to 3.3 times.

Ashland's target is to reduce its leverage to between 1.5 times to 2.0 times EBITDA within two to four years by using excess cash flow, which is important to achieving the company's goal of an investment grade credit rating.

Ashland is a Covington, Ky., chemical company. Hercules is a Wilmington, Del., manufacturer and marketer of specialty chemicals.

Masonite slides lower

Switching to secondary happenings, Masonite's term loan headed down in trading on Tuesday as the company held a lender call to talk about its overall situation, according to a trader.

The term loan was quoted at 82 bid, 83 offered, down from Monday's levels of 82½ bid, 83½ offered, the trader said.

"This thing basically seems like it's marching towards bankruptcy. They have a bond coupon due Oct. 15. Been trying to get a [loan] forbearance and that hasn't happened. [And], they hired an advisor," the trader remarked, adding that the lender call was held to discuss these issues.

As has been previously reported, the company has been negotiating with its credit facility lenders for quite some time now regarding an amendment and a waiver of non-compliance with its adjusted EBITDA and interest coverage ratios.

The company's net debt to trailing 12 months adjusted EBITDA ratio was 8.25 times at June 30, compared to 6.00 times at Dec. 31, 2007 and a covenant maximum of 7.00 times.

And, the company's cash interest coverage ratio was 1.51 times at June 30, compared to 1.91 times at Dec. 31, 2007 and a covenant minimum of 1.65 times.

Masonite is a Tampa, Fla.-based manufacturer of residential and commercial doors.

Spirit AeroSystems weakens

Spirit AeroSystems's term loan also softened during the trading session, with the debt's performance attributed to continued investor reaction to the company's recent update on the International Association of Machinists strike at Boeing, according to a trader.

The term loan was quoted at 96½ bid, 97½ offered, down from Monday's levels of 97 bid, 98 offered, and Friday's levels of 97½ bid, 98¼ offered, the trader said.

On Monday morning, the company announced that its previous 2008 financial guidance, provided on July 31, is being withdrawn as a result of the labor strike at Boeing, its largest customer.

The company also said that it will update its 2008 financial guidance and provide 2009 financial guidance when practical, after the strike has ended.

In addition, Spirit AeroSystems disclosed that it is taking immediate action to reduce production volumes on certain Boeing products.

These actions include implementing a revised production and delivery schedule utilizing a reduced work week for employees who support, manufacture and assemble the affected products.

Spirit AeroSystems is a Wichita, Kan.-based designer and manufacturer of aero-structures.

LCDX softens

Also in trading, LCDX 10 posted losses on Tuesday as it followed the stock market lower, but the general cash loan market was unchanged to an eighth to a quarter cheaper, depending on the name, according to a trader.

The index was quoted at 97.15 bid, 97.25 offered, down from 97.40 bid, 97.50 offered, the trader said.

Nasdaq closed down 59.95 points, or 2.64%, Dow Jones Industrial Average closed down 280.01 points, or 2.43%, S&P 500 closed down 43.28 points, or 3.41%, and NYSE closed down 297.47 points, or 3.64%.

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