Texas Competitive softens; Evertec breaks; MidContinent, Hertz, HCR ManorCare rework deals

By Sara Rosenberg

New York, March 1 - Texas Competitive Electric Holdings Company LLC's loans slid lower on Tuesday after experiencing a strong run-up recently on the back of default allegations, and Evertec Inc.'s credit facility allocated and freed up for trading, with the term loan quoted above par.

Over in the primary market, MidContinent Communications made some changes to its term loan B, including reducing pricing as well as the Libor floor and accelerating the commitment deadline due to strong oversubscription.

Also coming out with changes was Hertz Corp., as it downsized its credit facility and revised pricing on its institutional debt, HCR ManorCare upsized its deal and trimmed spreads, and JohnsonDiversey Inc. added a pricing step-down and call protection to its B loan.

In more primary news, Isle of Capri Casinos Inc. and Grocery Outlet Inc. started distributing some price talk on their credit facilities as the deals are gearing up for bank meetings later this week, and Calpine Corp., Hanger Orthopedic Group Inc. and Armstrong World Industries Inc. emerged with refinancing/repricing transactions.

Furthermore, IMS Health Inc. released details on structure and pricing on its term debt, American Seafoods Group LLC set talk on its A loan, and Arizona Chemical Inc. launched its downsized term loan B repricing.

Texas Competitive slides

Texas Competitive's term loans were a bit weaker in trading with sources claiming that the downward pressure was a result of profit taking, since the debt has recently rallied by a few points.

One trader had the Dallas-based energy company's term loan B-1 and B-2 quoted at 84¼ bid, 84¾ offered, down from opening levels of 85 bid, 85½ offered and Monday's late day levels of 84½ bid, 85½ offered.

A second trader, meanwhile, had the term loan B-1, B-2 and B-3 all quoted at 83 7/8 bid, 84 3/8 offered, down from 84¼ bid, 84 5/8 offered.

"Plenty of people want to take profits. It's still up 2 points. Was 821/2-83 before [the] letter [regarding potential default] was released," the first trader added.

When news of the alleged default hit, the company's bank debt rallied, with some guessing that investors may view this as a catalyst to improve pricing.

Aurelius may form group

As was previously reported, Aurelius Capital Management LP, a lender under the credit facility, is alleging that Texas Competitive is in default as a result of certain intercompany loans that were made. The firm is claiming that the loans do not comply with the arm's-length basis requirement and that the non-compliance has resulted in a failure to make certain mandatory prepayments under the credit facility.

Aurelius has hired law firm Dechert to pursue the alleged default and is trying to put together an informal group of lenders to join in the complaint, a source remarked.

A call is scheduled to take place on Wednesday for lenders that want to join in the fight.

There was already a conference call with Citigroup, the administrative agent on the credit facility, late Monday. According to the source, Citi claimed it was doing what was required under the credit agreement, but for now, everything is staying status quo.

Texas Competitive has said in filings with the Securities and Exchange Commission that the default allegations are without merit and that it will defend itself against the accusations.

Evertec frees up

Also in the secondary, Evertec's credit facility hit the secondary market on Tuesday, with its $354 million term loan B quoted at par ¼ bid, par ¾ offered, according to a trader.

Pricing is Libor plus 400 basis points, after firming at the wide end of the Libor plus 375 bps to 400 bps talk, and there is a step to Libor plus 375 bps at less than 2.25 times secured leverage that was added during syndication. There is also a 1.5% floor and 101 soft call protection for six months, and it was sold at par.

Bank of America Merrill Lynch and Morgan Stanley are the lead banks on the $404 million credit facility, which also provides for a $50 million revolver and will be used to refinance an existing facility that was obtained in the fall of 2010 to help fund a buyout by Apollo Management LP.

The existing deal consisted of a $355 million term loan at Libor plus 525 bps with a 1.75% Libor floor, which was sold at 97 and has 101 soft call protection for one year, and a $50 million revolver.

Evertec is a Puerto Rico-based provider of transaction processing, payment processing, merchant acquiring and other related services.

Solutia trades

Solutia Inc.'s $700 million term loan B due August 2017 freed up late in the day Monday in the par bid, par ½ offered context, but a lot of traders did not really start quoting the deal until Tuesday morning.

Early in the session, one trader was seeing the loan at par 3/8 bid, par ¾ offered, and a second trader was seeing it at par 1/8 bid, par 5/8 offered. By late afternoon, another trader was quoting it at par 3/8 bid, par 7/8 offered.

Pricing on the term loan is Libor plus 275 bps with a step-down to Libor plus 250 bps when net total leverage falls below 2.0 times. There is a 0.75% Libor floor and 101 soft call protection for six months, and the loan was sold at par.

During syndication, the pricing step-down was added and the Libor floor was trimmed from 1%.

Solutia repricing loan

Proceeds from Solutia's term loan are being used to refinance/reprice an existing B loan obtained in March 2010 to refinance bank debt. The initial size on the loan had been $850 million, but it has since been reduced through paydowns.

Pricing on the existing loan is Libor plus 325 bps with a step-down to Libor plus 300 bps at 2.5 times leverage and a 1.5% Libor floor, and it was sold at an original issue discount of 991/2.

Deutsche Bank is the lead bank on the deal.

Solutia is a St. Louis-based performance materials and specialty chemicals company.

Rite Aid retreats

Rite Aid Corp.'s $343 million tranche 5 term loan moved down to 99¼ bid, 99¾ offered on Tuesday, after breaking late in the day Monday at 99 7/8 bid, par 3/8 offered, according to a trader.

Pricing on the term loan is Libor plus 325 bps with a 1.25% Libor floor, which was tightened from 1.5%, and it was sold at an original issue discount of 991/2. There is 101 soft call protection for one year that was extended from the initially proposed term of six months.

Proceeds are being used to refinance a tranche 3 term loan that is priced at Libor plus 300 bps with a 3% Libor floor and was sold at an original issue discount of 90 when it was done in July 2008. The loan was sized at $350 million at close but has since been paid down.

Citigroup, Bank of America Merrill Lynch, Credit Suisse, GE Capital and Wells Fargo are the lead banks on the deal for the Camp Hill, Pa.-based drugstore chain.

MidContinent flexes

Switching to the primary, MidContinent Communications reduced pricing on its $350 million term loan B to Libor plus 300 bps from Libor plus 325 bps and tightened the Libor floor to 1% from 1.25%, while leaving the par offer price and 101 soft call protection for one year unchanged, according to a market source.

The term loan B includes a step-down to Libor plus 275 bps when leverage is 3.5 times.

The company's $675 million credit facility also provides for a $125 million revolver and a $200 million term loan A, with both of these tranches priced in line with initial talk at Libor plus 275 bps.

As a result of heavy oversubscription, the commitment deadline on the deal was pushed up to 5 p.m. ET on Wednesday from March 7, the source added.

SunTrust, Wells Fargo, RBC and U.S. Bank are the joint bookrunners on the deal.

MidContinent refinancing

Proceeds from MidContinent Communications' credit facility will be used to replace an existing credit facility that has the same structure but higher pricing. Currently, the company's pro rata debt is priced about 100 bps higher than the new revolver and term loan A, and the existing term loan B is priced at Libor plus 450 bps with a step-down to Libor plus 425 bps once leverage falls below 3.5 times and a 1.75% Libor floor. The B loan has 101 soft call protection for one year.

When the facility was obtained in August 2010 to fund a distribution, refinance debt and for general corporate purposes, the term loan B was sold at an original issue discount of 981/2.

Corporate and loan ratings are B1/B+, and leverage is roughly 4.3 times, about half a turn lower than it was when the original deal was completed.

MidContinent Communications is a Minneapolis-based provider of cable television, local and long-distance digital telephone service and high-speed internet access.

Hertz revises size, pricing

Hertz downsized its seven-year synthetic letter-of-credit facility (Ba1/BB) to $200 million from $250 million and lowered pricing on the tranche, as well as on its $1.35 billion seven-year covenant-light term loan B (Ba1/BB) to Libor plus 275 bps from Libor plus 300 bps, according to sources.

Additionally, the Libor floor on the institutional debt was cut to 1% from 1.25%, and while the original issue discount on the term loan was left at 991/2, the discount on the synthetic letter-of-credit facility widened to 97½ from 991/2, sources said. The 101 soft call protection for one year was left intact.

The Park Ridge, N.J.-based auto and equipment rental company's $3.35 billion credit facility, down from $3.4 billion, also includes a $1.8 billion ABL revolver.

Deutsche Bank, Wells Fargo, Barclays, Bank of America Merrill Lynch, Citigroup, Credit Agricole and J.P. Morgan are the bookrunners on the refinancing deal and asked for recommitments by 5 p.m. ET on Tuesday.

ManorCare ups loan

HCR ManorCare upsized its revolving credit facility to $175 million from $150 million and lowered pricing to Libor plus 350 bps from Libor plus 375 bps, according to a market source.

Pricing on the $400 million term loan was also cut to Libor plus 350 bps from Libor plus 375 bps, and 101 soft call protection for one year was added. The 1.5% Libor floor and original issue discount of 99 were left unchanged.

J.P. Morgan, Bank of America Merrill Lynch and Credit Suisse are the lead banks on the now $575 million credit facility (Ba3/B+), up from $550 million.

Proceeds will be used to refinance the company's existing term loan and revolver as part of its previously announced sale/leaseback transaction with HCP Inc.

HCR ManorCare is a Toledo, Ohio-based provider of short-term, post-acute services and long-term care.

JohnsonDiversey tweaks deal

JohnsonDiversey, a Sturtevant, Wis.-based provider of commercial cleaning, sanitation and hygiene products, added 101 soft call protection for one year and a step-down to Libor plus 275 bps at less than or equal to 2.25 times total leverage to its $386 million term loan B, according to a market source.

Initial pricing on the B loan was left unchanged at Libor plus 300 bps with a 1% Libor floor, and the debt is still being offered at par.

Through this transaction, the loan is being amended to lower pricing from Libor plus 325 bps with a 2% Libor floor. When it was obtained in 2009 to fund a recapitalization, it was sold at an original issue discount of 99.

Also under the amendment, the total net leverage ratio will be revised to 4.75 times and the interest coverage ratio will be revised to 2.75 times.

Citigroup is leading the deal and consents were due at noon ET on Tuesday.

Isle of Capri floats talk

Isle of Capri revealed price talk of Libor plus 350 bps on its proposed $825 million credit facility ahead of the Thursday morning bank meeting that will kick off syndication on the transaction, according to a market source.

The facility consists of a $325 million five-year revolver and a $500 million six-year term loan.

Revolver pricing will be subject to a grid.

In addition, the term loan has a 1.25% Libor floor and an offer price that is still to be determined, the source said.

Wells Fargo, Credit Suisse and Deutsche Bank are the lead banks on the deal.

Isle of Capri selling notes

Isle of Capri also said on Tuesday that it will be issuing $300 million of senior notes and that proceeds from the bonds, as well as from the credit facility, will be used to refinance existing bank debt.

The company expects to close on the new facility shortly after completing the notes offering and prior to the end of the fourth quarter of fiscal 2011.

As of Jan. 23, the company had about $811 million outstanding under its term loan due Nov. 25, 2013 and about $79.5 million outstanding under its $375 million revolver due July 26, 2012.

The weighted average effective interest rate of the facility for the nine months ended Jan. 23 was 6.47%.

Isle of Capri is a St Louis-based owner and operator of gaming, lodging and entertainment facilities.

Grocery readies deal

Grocery Outlet is also set to hold a bank meeting on Thursday, at which time it plans to launch a $168 million senior secured credit facility with price talk of Libor plus 400 bps with a 1.5% Libor floor, according to a market source.

The facility consists of a $25 million revolver and a $143 million term loan, with the offer price on the term loan not yet available, the source said.

Societe Generale is the bookrunner on the deal - joint lead arrangers are still to be determined - that will be used to refinance an existing credit facility obtained in 2009 in connection with an equity investment by Berkshire Partners LLC. The company's existing mezzanine debt is staying in place.

Pricing on the Berkeley, Calif.-based grocery retailer's existing bank deal is Libor plus 575 bps with a 2.5% Libor floor.

Leverage is 2.1 times senior and 2.9 times total. The company has over 55% equity capitalization.

Vision Solutions coming soon

Another company slated to hold a Thursday bank meeting is Vision Solutions Inc., which will launch a $385 million credit facility comprised of a $15 million revolver, a $240 million first-lien term loan and a $130 million second-lien term loan, according to a market source.

Leverage through the first-lien is 3.6 times and leverage through the second-lien is 5.6 times.

Jefferies is the lead bank on the deal that will be used to repay $223 million of existing bank loans, redeem $33 million of preferred stock and fund a $118 million dividend to stockholders.

Last summer, the company closed on a $255 million senior secured facility for its acquisition of Double-Take Software Inc. that consisted of a $15 million revolver and a $240 million term loan, both priced at Libor plus 600 bps with a 1.75% Libor floor, and sold at a discount of 96. The term loan includes 101 soft call protection for one year.

Vision Solutions is an Irvine, Calif.-based provider of high availability, disaster recovery and system management services for IBM Power Systems.

MSCI plans repricing

MSCI Inc. said in a news release late Tuesday that it will get a $1.125 billion senior secured term loan that will be used to reprice its existing loan, and chatter is that the call to launch the deal will take place on Wednesday, according to a market source. No official word on timing was available by press time.

In connection with the repricing, $90 million of the existing $1.2 billion loan maturing in 2016 will be repaid, and certain covenants in the senior secured credit facility will be amended.

The existing loan, obtained in June 2010 in connection with the acquisition of RiskMetrics Group Inc., is priced at Libor plus 325 bps with a step-down to Libor plus 300 bps at 2.75 times leverage and a 1.5% Libor floor, and it was sold at an original issue discount of 991/2.

Morgan Stanley is the sole lead arranger on the deal and a joint bookrunner with Bank of America Merrill Lynch. UBS Securities LLC is a co-manager.

MSCI is a New York-based provider of investment decision support tools to investors.

Calpine comes with refi

Calpine announced early Tuesday that it would be holding an 11 a.m. ET call to launch a $1.3 billion seven-year senior secured covenant-light term loan B (B1), and then, with the launch, talk surfaced at Libor plus 325 bps with a 1.25% Libor floor, a par offer price and 101 soft call protection for one year, sources said.

Morgan Stanley, Goldman Sachs, Citigroup, Credit Suisse and Deutsche Bank are the bookrunners on the deal that will be used to refinance a $1.3 billion term loan that was obtained by the company's subsidiary, New Development Holdings LLC, in June 2010 to fund the purchase of power generation assets from Pepco Holdings Inc.

Pricing on the existing term loan, which is not covenant-light, is Libor plus 550 bps with a 1.5% Libor floor, and it was sold at a discount of 98. Lenders are getting repaid at 101 due to call protection.

Calpine, a Houston-based power company, will be the borrower under the new loan.

Hangers sets repricing

Hanger Orthopedic Group surfaced with a $300 million term loan B talked at Libor plus 300 bps with a 1% Libor floor and a par offer price that will be used to refinance the existing term loan B that was obtained late last year in connection with the acquisition of Accelerated Care Plus, according to a market source.

At close, the existing term loan B was sized at $325 million and had pricing of Libor plus 375 bps with a 1.5% Libor floor. It was sold at an original issue discount of 99½ and includes 101 soft call protection for one year.

Bank of America Merrill Lynch is the lead bank on the deal that was launched with a conference call at 2 p.m. ET on Tuesday.

Hanger is an Austin, Texas-based provider of orthotic and prosthetic patient care services.

Armstrong hits market

Armstrong World Industries also surfaced with a repricing/refinancing deal that was launched with a call at 11:30 a.m. ET on Tuesday, according to a market source.

The company's $550 million term loan B is being talked at Libor plus 300 basis points with a 1% Libor floor, a par offer price and 101 soft call protection for six months, the source said.

By comparison, the existing loan, obtained late last year for a dividend recapitalization, is priced at Libor plus 350 bps with a 1.5% Libor floor, and it was sold at an original issue discount of 991/2.

Bank of America Merrill Lynch is the lead bank on the deal.

Armstrong is a Lancaster, Pa.-based designer and manufacturer of floors, ceilings and cabinets.

IMS details announced

IMS Health held a call on Tuesday as well, launching its previously expected term loan repricing/refinancing, as well as a new $100 million delayed-draw term loan, according to a market source.

Talk on the delayed-draw loan and the $1.25 billion term loan is Libor plus 325 bps with a 1.25% Libor floor, a par offer price and 101 soft call protection for one year, and the delayed-draw loan has a 50 bps ticking fee starting June 1 and rising through Aug. 15, the source said.

Meanwhile, the €550 million term loan is being talked at Euribor plus 350 bps with a 1.25% to 1.5% base rate floor, a par offer price and 101 soft call protection for one year, the source continued.

Goldman Sachs & Co. is the left lead bank on the deal.

IMS funding acquisition

Proceeds from IMS Health's delayed-draw loan will be used to fund the acquisition of SDI Health, a privately held health care market insights and analytics firm serving the U.S. market.

And, the funded U.S. and euro term loans are being used to reprice existing term debt obtained last year to help fund the buyout of the company by TPG Capital and the CPP Investment Board.

Pricing on the existing $1.25 billion U.S. piece is Libor plus 350 bps, and pricing on the existing €550 million euro piece is Euribor plus 375 bps, with both having a 1.75% floor and an original issue discount price of 99.

IMS Health is a Norwalk, Conn.-based provider of market intelligence to the pharmaceutical and health care industries.

ASG talk emerges

American Seafoods Group launched its $100 million term loan A on Tuesday with price talk of Libor plus 275 bps, according to a market source. Previously, it was heard that pricing was expected in the upper 200 bps area.

The term loan A will be used to repay term loan B borrowings, bringing the B loan down to $282 million, and then the smaller B tranche is being repriced, with talk coming as expected at Libor plus 300 bps with a 1.25% Libor floor and a par offer price.

Pricing on the original term loan B, which was completed in 2010 at a size of $390 million for a refinancing transaction, was Libor plus 400 bps with a 1.5% Libor floor, and it was sold at an original issue discount of 99.

Bank of America Merrill Lynch is the lead bank on the deal for the Seattle-based harvester, processor, preparer and supplier of seafood.

Arizona Chem launches

Arizona Chemical is in the process of paying down at par its term loan B to about $430 million through cash generation, and it is the repricing of this smaller amount that was launched to investors with a 1 p.m. ET lender call on Tuesday, according to a market source.

When the B loan was first obtained late last year to help fund the company's buyout by American Securities, it was sized at $470 million.

Goldman Sachs is the left lead bank on the deal.

Signature pages for the repricing are due on Monday.

Arizona Chem guidance

As was previously reported, price talk on Arizona Chemical's repriced term loan B is Libor plus 325 bps to 350 bps with a 1.5% Libor floor and a par offer price, and there is 101 soft call protection for one year.

By comparison, last year the loan got done at pricing of Libor plus 500 bps with a 1.75% Libor floor, and it was sold at an original issue discount of 981/2. There is 101 soft call protection for one year, so existing guys are being taken out at 101 with this repricing transaction.

Arizona Chemical is a Jacksonville, Fla., supplier of pine chemicals to the adhesives, inks and coatings and oleochemicals markets.

Transtar holds call

Another deal to officially launch with a call on Tuesday was Transtar Industries Inc.'s repricing of its $240 million first-lien term loan B, which is being talked at Libor plus 325 bps with a 1.25% Libor floor and a par offer price and includes 101 soft call protection for one year according to a market source.

When obtained late last year for a buyout by Friedman Fleischer & Lowe, pricing on the term loan B was Libor plus 450 bps with a step-down to Libor plus 425 bps at less than 4.5 times leverage. There is a 1.75% Libor floor and 101 soft call protection for one year, which lenders are receiving with the repricing, and it was sold at an original issue discount of 99.

There will be no changes made to the company's revolver and second-lien term loan.

RBC is the left lead bank on the Cleveland-based transmission parts provider's deal.

General Chem firms talk

Also in the primary, General Chemical Performance Products LLC (GenTek Inc.) set price talk on its $425 million term loan at Libor plus 350 bps with a 1.5% Libor floor, a par offer price and 101 soft call protection for one year, according to sources.

Previously, the loan was being whispered at Libor plus 350 bps to 375 bps.

Goldman Sachs is the lead bank on the deal that launched with a call on Monday and will be used to reprice an existing loan.

Pricing on the existing term loan is Libor plus 500 bps with a 1.75% Libor floor and it was sold at an original issue discount of 98½ when it was obtained late last year for a dividend recapitalization.

Existing lenders are getting paid down at 102 as a result of the call protection that is in place on the term loan.

General Chemical is a Parsippany, N.J.-based manufacturer of organic and inorganic chemicals.

Visant closes

Visant Corp. completed its $1.25 billion 61/4-year senior secured term loan B repricing amendment on Tuesday, according to an 8-K filed with the SEC.

Pricing on the term loan is Libor plus 400 bps with a 1.25% Libor floor, and it was sold at par. There is 101 soft call protection for one year, which, during syndication, was changed from 101 call protection through September 2011.

Prior to the amendment, pricing was Libor plus 525 bps with a 1.75% Libor floor, and it was sold at an original issue discount of 98. There is 101 soft call protection for one year, which lenders received with this repricing.

Credit Suisse and KKR acted as the leads on the deal.

Visant is an Armonk, N.Y.-based marketing and publishing services enterprise servicing the school affinity, direct marketing, fragrance and cosmetics, and educational and trade publishing segments.

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