Neiman, Rite Aid gain ground; Hanesbrands tweaks loan; Green Tree, Pinnacle catch interest

By Sara Rosenberg

New York, Dec. 3 - Neiman Marcus Inc. and Rite Aid Corp. saw an improvement in their bank debt levels during Thursday's trading session even though both companies came out with November numbers that fell short of the previous year's performance.

Moving to the primary market, Hanesbrands Inc. reduced pricing on its term loan due to strong oversubscription and added a step down based on leverage.

In more primary news, Green Tree Financial's credit facility has been getting some positive attention from lenders since launching just a few days ago, and Pinnacle Foods Group LLC's incremental term loan C has been receiving a strong amount of interest ahead of its launch.

Neiman rises

Neiman Marcus' term loan B was stronger in trading despite the company showing a slight year-over-year decline in November revenues, according to traders.

The term loan B was quoted by one trader at 85½ bid, 86 offered, up from 84½ bid, 85½ offered, and by a second trader at 85½ bid, 86 offered, up from 85¼ bid, 85¾ offered.

For November, total revenues were $305 million, down 5.9% from $324 million in the comparable period last year.

And, comparable revenues for the month were $299 million, down 7.5% from $323 million in November 2008.

From a liquidity standpoint, the company's cash balance as of Nov. 28 was more than $335 million compared to $175 million in the prior year, and its $600 million asset-based revolver was undrawn.

Neiman Marcus is a Dallas-based high-end specialty retailer.

Rite Aid moves up

Rite Aid's bank debt headed higher on Thursday, shrugging off November sales results, with one trader claiming that the rise probably had to do with the market in general feeling a little better.

The tranche 2 term loan was quoted by traders at 86 3/8 bid, 86 7/8 offered, with one trader saying it was up three-eighths of a point on the day and another trader saying it was up from 86 bid, 86¾ offered.

The tranche 3 term loan was quoted by traders at 92½ bid, 93¼ offered, with both traders placing the paper higher by a quarter of a point on the day.

And, the tranche 4 term loan was quoted by traders at 103¼ bid, 103¾ offered, with both traders claiming the debt was up from 103 1/8 bid, 103 5/8 offered.

Rite Aid sales numbers

For November, Rite Aid's same-store sales decreased 0.8% over the prior-year period.

Total drugstore sales for the five-week period decreased 2.1% to $2.425 billion compared to $2.476 billion for the same period in 2008.

For the 13-week quarter ended Nov. 28, same-store sales decreased 0.5% over the prior-year period.

And, total drugstore sales for this 13-week third quarter decreased 1.8% to $6.329 billion from $6.444 billion last year.

Rite Aid is a Camp Hill, Pa.-based drugstore chain.

Hanesbrands cuts pricing

Switching to new deal happenings, Hanesbrands reverse flexed pricing on its $750 million six-year term loan as the deal was well-received by investors and a step down was added as well, according to sources.

The term loan is now priced at Libor plus 325 basis points, down from initial talk of Libor plus 350 bps, sources said.

In addition, pricing on the term loan can step down to Libor plus 300 bps when leverage is less than 2½ times, sources continued.

The term loan's 2% Libor floor and original issue discount of 99 were left unchanged.

Hanesbrands also getting revolver

Hanesbrands $1.15 billion senior secured credit facility (Ba1) also includes a $400 million four-year revolver that is talked at Libor plus 450 bps.

JPMorgan, Bank of America, HSBC and Barclays are the lead banks on the deal.

Proceeds from the credit facility, along with $500 million of bonds, will be used to refinance existing debt, including the company's existing senior secured credit facility and its second-lien credit facility.

The company's $500 million 8% senior notes priced on Thursday at 98.686 to yield 8¼%.

Hanesbrands is a Winston Salem, N.C.-based marketer of everyday apparel essentials.

Green Tree coming along

Green Tree Financial's $380 million credit facility (B1/B+) is "going pretty well" as there has been some good feedback from investors since the Tuesday afternoon bank meeting took place to launch the deal, a market source told Prospect News.

The source remarked that this is not the type of deal that will appeal to everyone.

"Some guys won't look at it because the word mortgage is attached. Others realize it's a service and they don't have much exposure to that," the source explained.

The facility consists of a $30 million revolver and a $350 million term loan B that is talked at Libor plus 500 bps with a 2.25% Libor floor and an original issue discount in the 97 area.

Deutsche Bank and Credit Suisse are the joint lead arrangers on the deal that will be used to repay debt and fund a dividend, with Deutsche the left lead.

Commitments are due on Dec. 10.

Green Tree is a fee-based servicing company that provides third-party servicing for consumer loans.

Pinnacle Foods filling up

Pinnacle Foods' $750 million incremental term loan C is already almost fully subscribed ahead of the Monday bank meeting that is supposed to officially kick off syndication on the transaction, according to a market source.

Price talk on the term loan C is Libor plus 500 bps with a 2.5% Libor floor and an original issue discount of 98.

This talk is different than what the company had outlined in the credit facility commitment letter. In that letter, pricing on the term loan C was described as Libor plus 450 bps with a 2% Libor floor and an original issue discount of 98.

In addition to the term loan C, the company is getting a $20 million incremental revolver, which is not being syndicated and will be used for general corporate purposes and working capital. The revolver add-on will be priced in line with the existing revolver.

Maturity dates on the incremental debt will match those of the company's existing debt.

Pinnacle Foods selling bonds

Pinnacle Foods is also planning to sell $400 million of senior unsecured notes, with proceeds from these bonds, the term loan C and $365 million in equity being used to fund the acquisition of Birds Eye Foods Inc. from Vestar Capital Partners, Pro-Fac Cooperative and management in a transaction valued at $1.3 billion.

Initially it was thought that the bonds would be sized at $275 million and the term loan C would be sized at $875 million, but $125 million was shifted from the loan to the notes.

Barclays, Bank of America and Credit Suisse are the joint lead arrangers and bookrunners on the credit facility, with Barclays the left lead. HSBC and Macquarie Capital are bookrunners as well.

Bank of America, Credit Suisse, HSBC and Macquarie each committed to provide $5 million of the incremental revolver.

Closing of the transaction is expected to occur no later than the first quarter of 2010, subject to customary conditions, including regulatory approvals.

Pinnacle Foods is a Cherry Hill, N.J.-based manufacturer and distributor of branded packaged foods. Birds Eye is a Rochester, N.Y.-based packaged food company with more than $930 million of total sales.

© 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.