GenTek tweaks deal; Hub sets talk; Reynolds blowing out, deadline accelerated; Freescale up

By Sara Rosenberg

New York, Oct. 23 - GenTek Inc. came out with some changes to its credit facility on Friday, including increasing the term loan size and reducing the Libor floor, and price talk on Hub International Ltd.'s incremental term loan surfaced.

Also on the new deal front, Reynolds' U.S. term loan is going exceptionally well in terms of syndication as the tranche is already largely oversubscribed despite only officially launching just a few days ago and, as a result, the commitment deadline was moved up.

Moving to the secondary market, Freescale Semiconductor Holdings I Ltd.'s term loan headed higher as investors reacted to the company's recent released quarterly results.

GenTek upsizes term loan

GenTek announced changes to its credit facility that included increasing the five-year term loan B to $325 million from $300 million and lowering the Libor floor to 2.25% from 2.5%, according to a market source.

"Extra $25 [million] based on the high demand. Will probably be used to reduce the sponsor equity contribution. No recommitments; everyone staying in given how oversubscribed it is," the source remarked.

The spread on the term loan B remained at Libor plus 475 basis points and the original issue discount firmed at 98, the tight end of initial talk of 97 to 98.

GenTek's now $355 million, up from $330 million, senior secured credit facility also includes a $30 million four-year revolver priced at Libor plus 450 bps with a 75 bps undrawn fee.

As a result of the upsizing, ratings on the credit facility are going to be revised to B1/B+ from Ba3/BB- and corporate ratings are going to change to B1/B from B1/B+, the source added.

GenTek led by Goldman

Goldman Sachs is the lead arranger and bookrunner on the GenTek credit facility, KeyBank is the syndication agent and GE Capital is the administrative agent.

Proceeds from credit facility will be used to help fund American Securities LLC's acquisition of the company for $38 per share.

Financial covenants under the facility include a minimum interest coverage and a maximum total leverage ratio.

GenTek is a Parsippany, N.J.-based provider of specialty inorganic chemical products and valve actuation systems and components for automotive and heavy duty/commercial engines.

Hub price talk

Hub International held a conference call on Friday morning to launch its $200 million incremental term loan, and in connection with the launch, price talk was announced, according to a market source.

The term loan is being talked at Libor plus 475 bps to 500 bps with a 2% Libor floor, the source said.

And, original issue discount on the loan is being indicated in the 98 area, the source added.

Morgan Stanley and Bank of America are the lead banks on the deal that will be used for general corporate purposes.

Hub is a Chicago-based insurance company.

Reynolds oversubscribed

Reynolds $835 million term loan was well oversubscribed by Friday morning, which enabled the lead bank to change the commitment deadline to Monday from Tuesday, according to market sources.

"Yeah, it's a blow out," one buyside source remarked.

"Already have over $2 billion in orders for the $835 million term loan," a second source added. "My guess is pricing will tighten. Personal guess is [Libor plus] 450 with a 99 OID."

The term loan was launched to investors this past Tuesday with price talk of Libor plus 500 bps, with a 2% Libor floor and an original issue discount in the 97 to 98 area.

However, prior to the meeting, sales people were telling investors to expect price talk to emerge around the Libor plus 450 bps to 500 bps area with an original issue discount of 98.

The company's roughly $1.45 billion credit facility also includes a $120 million revolver, an €80 million revolver and a €250 million term loan.

Credit Suisse is the lead bank on the deal.

Reynolds funding acquisition

Proceeds from the Reynolds credit facility will be used to help fund the acquisition of Closure Systems International and Reynolds Consumer Products by Beverage Packaging Holdings, the holding company of SIG Group, which is owned by Rank Group.

The total purchase price for the companies is $3.023 billion, or 7.7 times LTM adjusted pro forma EBITDA.

Other funds for the acquisition will come from $1.1 billion of senior secured notes, €450 million of senior secured notes, €116 million of existing cash and €500 million of equity.

These financings will also be used to repay existing bank borrowings at Beverage Packaging of around €485 million and repay existing Reynolds debt.

Reynolds leverage multiples

Pro forma for the transaction, Reynolds' net senior secured leverage will be 3.3 times and net total leverage will be 4.8 times.

Closing on the acquisition is expected to take place in the fourth quarter and the combined entity will assume the Reynolds name.

Reynolds is a manufacturer of aluminum foil, wraps and bags. Closure Systems is a manufacturer of plastic caps and closures, primarily serving the beverage market. And, Beverage Packaging is a manufacturer of aseptic carton packaging systems.

Freescale gains ground

Switching to trading news, Freescale Semiconductor's term loan was better on the back of the release of earnings results, according to a trader.

The term loan was quoted at 82 bid, 82½ offered, the trader said. On Thursday, prior to the release of numbers, the loan was quoted at 81 bid, 82 offered and immediately after earnings came out, the loan moved to 81¾ bid, 82½ offered, the trader continued.

Late in the day on Thursday, Freescale announced that for the third quarter ended Oct. 2, it had a net loss of $410 million, compared to a net loss of $484 million in the second quarter of 2009 and a net loss of $3.48 billion in the third quarter of 2008.

Net sales for the quarter were $893 million, compared to $824 million in the second quarter of 2009 and $1.41 billion in the third quarter last year.

EBITDA for the quarter was $119 million, compared to $38 million in the second quarter of 2009 and $322 million for the third quarter in 2008.

And, cash and cash equivalents were $1.33 billion on Oct. 2, compared to $1.31 billion on July 3.

Freescale is an Austin, Texas-based designer and manufacturer of embedded semiconductors for the automotive, consumer, industrial and networking markets.

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