Hanesbrands, Booz Allen break; Dollar General up on numbers; Green Tree, Fairway tweak deals

By Sara Rosenberg

New York, Dec. 10 - Hanesbrands Inc. and Booz Allen Hamilton Inc. both saw their new loans hit the secondary market on Thursday, and both deals were trading above the original issue discounts at which they were issued.

In more trading happenings, Dollar General Corp.'s term loans were stronger following the release of third-quarter results that showed a year-over-year improvement in net income, sales and adjusted EBITDA.

Over in the primary market, Green Tree Financial came out with a number of changes to its term loan B, including increasing the spread and the original issue discount, and once these revisions were put in place, momentum picked up.

Also, Fairway Market LLC revised its credit facility once again, this time focusing on tranching as the term loan was upsized and the revolver was downsized.

Hanesbrands frees to trade

Hanesbrands' credit facility broke for trading during market hours, with the term loan trading around the 101 type context throughout the day, according to traders.

Specifically, the $750 million six-year term loan was quoted by traders at par ¾ bid, 101¼ offered pretty much from the break until the close.

"Been a fair amount of trading around but hasn't moved," one trader added.

The term loan is priced at Libor plus 325 basis points with a step-down to Libor plus 300 bps when leverage is less than 2½ times. There is a 2% Libor floor and it was sold at an original issue discount of 99.

During syndication, pricing on the term loan was reduced from Libor plus 350 bps and the step-down was added.

Hanesbrands lead banks

JPMorgan, Bank of America, HSBC and Barclays acted as the lead banks on Hanesbrands' $1.15 billion senior secured credit facility (Ba1), which closed on Thursday.

The facility also includes a $400 million four-year revolver that is priced at Libor plus 450 bps.

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

The new debt structure has a less restrictive leverage ratio covenant of 4.5 times debt to EBITDA, stepping down to 4.0 times by the end of 2010 and then 3.75 times in mid-2011. The company's target is to reduce leverage to 2.0 to 3.0 times debt to EBITDA, possibly as early as 2011.

The company said in a news release that its goal is to reduce debt by $300 million in 2009, which would reduce interest expense by about $20 million to $25 million next year. Another $300 million of debt reduction in 2010 - a priority for the company - would deliver a similar interest expense reduction in 2011.

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

Booz Allen breaks

Booz Allen Hamilton's $350 million term loan add-on (Ba2/BB-) was another deal that freed up for trading on Thursday, according to a trader.

The term loan was quoted at par bid, par ½ offered, the trader said.

Pricing on the term loan is Libor plus 400 bps with a 2% Libor floor, and it was sold at an original issue discount of 99.

Credit Suisse and Bank of America are the lead banks on the deal that will be used to help pay a $550 million dividend and retire a portion of a deferred payment obligation.

Other funds for the dividend payment will come from cash on hand.

Booz Allen Hamilton is a McLean, Va.-based strategy and technology consulting firm.

Dollar General rises

Dollar General's term loans gained some ground in trading as the company came out with third-quarter earnings that were better when compared to last year's results, according to traders.

The term loan B-1 was quoted by one trader at 95 bid, 95½ offered, up from 94 3/8 bid, 94 7/8 offered, and by a second trader at 94 7/8 bid, 95 3/8 offered, up a half a point on the day.

And, the term loan B-2 was quoted by one trader at 94½ bid, 95¼ offered, up from 94 bid, 94¾ offered, and by a second trader at94 ½ bid, 95 offered, up a half a point.

For the third quarter, Dollar General reported net income of $75.6 million, or $0.24 per diluted share, compared to a net loss of $7.3 million, or $0.02 per diluted share, in the 2008 third quarter.

Sales for the quarter increased 12.7% to $2.93 billion, compared to $2.6 billion last year.

Furthermore, adjusted EBITDA for the quarter increased 22.7% to $280.4 million from $228.6 million in the 2008 comparable period.

Dollar General plans debt reduction

Also on Thursday, Dollar General said that it expects to pay down debt of about $300 million in January 2010 with a portion of its expected excess cash.

As of Oct. 30, outstanding long-term obligations were $4.13 billion, including $2.29 billion outstanding under a senior secured term loan, and there were no borrowings under asset-based revolver.

The ratio of long-term obligations, net of cash, to adjusted EBITDA decreased to 3.3 to 1 as of Oct. 30 from 4.5 to 1 as of Oct. 31, 2008.

In addition, the senior secured incurrence test was 1.7 to 1 at the end of the quarter.

Dollar General is a Goodlettsville, Tenn.-based discount retailer.

Green Tree ups pricing

Switching to the primary, Green Tree Financial announced some modifications to pricing on its term loan B early Thursday afternoon, and the deal received a "lot of inquiry" following these changes and ahead of the 5 p.m. ET commitment deadline, according to a market source.

The $350 million term loan B is now being talked at Libor plus 575 bps, up from initial talk of Libor plus 500 bps, the source said.

Also, the original issue discount on the term loan B was increased to the 96 area from initial guidance in the 97 area, the source remarked.

The 2.25% Libor floor was left unchanged.

Furthermore, amortization on the term loan B was set at 2% per quarter, the source added.

Green Tree getting revolver, too

Green Tree Financial's $380 million credit facility (B1/B+) also includes a $30 million revolver.

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.

Previously, a source had explained that this is not the type of credit facility that will appeal to everyone because the word mortgage is attached to the company. However, that source also said that there are some guys out there who find it appealing.

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

Fairway reworks sizes

Fairway Market modified both its term loan and revolver sizes, resulting in a minimal decrease in the size of the overall credit facility, according to a market source.

The five-year term loan is now sized at $105 million, up from $100 million, while the 4½ year revolver is now sized at $9 million, down from $15 million, the source said.

Pricing on the term loan is Libor plus 950 bps with a 2.5% Libor floor and an original issue discount of 97.

At the start of this week, pricing on the term loan had been flexed up from Libor plus 800 bps and the discount firmed at the wide of the initial 97 to 98 talk.

Credit Suisse and Jefferies are the lead banks on the now $114 million, down from $115 million, deal that will be used to refinance existing debt and for expansion capital, with Credit Suisse the left lead.

Fairway is a supermarket chain with locations in New York and New Jersey.

Rural/Metro closes

Rural/Metro Corp. closed on Thursday on its $220 million credit facility (Ba3/BB), consisting of a $40 million four-year revolver and a $180 million five-year term loan, according to a news release.

Both tranches are priced at Libor plus 500 bps with a 2% Libor floor, and the term loan was sold at an original issue discount of 99.

During syndication, the term loan was upsized from $150 million, pricing on the term loan and the revolver was reduced from Libor plus 525 bps, and the original issue discount on the term loan was tightened from 98.

RBC acted as the lead bank on the credit facility.

Rural/Metro refinances debt

Proceeds from Rural/Metro's credit facility were used to refinance an existing credit facility that is due in 2011 and help fund a bond tender offer.

The reason for the term loan upsizing was because the company changed which bonds it would repurchase. Originally, the company was tendering for its roughly $95 million of 12¾% senior discount notes due 2016. That tender, however, was later canceled and instead an offer was made to buy back its $125 million of 9 7/8% senior subordinated notes due 2015.

Following conclusion of the tender offer, the company repurchased $121 million of the 9 7/8% notes.

Rural/Metro is a Scottsdale, Ariz.-based provider of emergency and non-emergency ambulance services and private fire protection services.

Datatel closes

Hellman & Friedman LLC completed its buyout of Datatel Inc. from Thoma Bravo, according to a news release.

To help fund the transaction, Datatel got a new $325 million credit facility, consisting of a $40 million five year revolver (Ba3) priced at Libor plus 450 bps, a $165 million six-year first-lien term loan (Ba3) priced at Libor plus 450 bps that was sold at an original issue discount of 981/2, and a $120 million seven-year second-lien term loan (B3) priced at Libor plus 825 bps that was sold at a discount of 98.

All tranches have a 2% Libor floor.

During syndication, the original issue discount on the first-lien term loan was tightened from 98, and the second-lien term loan was upsized from $100 million while pricing was dropped from Libor plus 850 bps and the discount was lowered from 97.

As a result of the second-lien upsizing, the equity used for the buyout was decreased.

Credit Suisse acted as the lead bank on the deal for the Fairfax, Va.-based provider of higher education software, services and insight.

© 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.