Caesars rises on amend, extend; Tronox reworks deal; Blue Coat, U.S. Security firm OIDs

By Sara Rosenberg

New York, Feb. 2 - Caesars Entertainment Operating Co. Inc.'s non-extended term loans rallied in trading on Thursday following news that the company will be approaching lenders with an amendment and extension offer.

Over in the primary, Tronox Inc. upsized its term loans and lowered the coupon due to strong oversubscription, Blue Coat Systems Inc. firmed up the original issue discount on its second-lien term loan at the high side of guidance, and U.S. Security Associates Inc. tightened its discount price.

Also, ACCO Brands Corp. and Citadel Plastics Holdings Inc. released pricing guidance on their credit facilities with launch, Focus Brands Inc. started going out with price talk on its new deal in preparation for its upcoming meeting, and Hamilton Lane joined next week's calendar.

Caesars heads higher

Caesars Entertainment's non-extended term loan debt was stronger in trading on Thursday as the company disclosed that it will be seeking to amend and extend some of the debt, according to traders.

The non-extended loans were quoted late day by one trader at 92¼ bid, 93¼ offered, up from 90½ bid, 91 offered, and by a second trader at 92¼ bid, 92¾ offered, up from 91 1/8 bid, 91 5/8 offered. In the morning, the first trader saw the loans get as high as 93½ bid, 94½ offered and the second trader saw them as high as 93 5/8 bid, 94 offered, before levels settled back in a little.

Under the proposal, which is expected to launch with a call early next week, the company will ask to extend the maturity on up to $4 billion of its roughly $5 billion term loan B-1, B-2 and B-3 debt by three years to Jan. 28, 2018 into a new term loan B-6.

Pricing on the new B-6 loan would be Libor plus 450 basis points if less than $3.25 billion is extended and Libor plus 475 bps if more than $3.25 billion is extended, sources said. Pricing on non-extended term loans is Libor plus 300 bps, and there is also currently about $1.2 billion in existing extended term loans due Jan. 28, 2018 that are priced at Libor plus 425 bps.

Caesars revolver plans

On top of the term loan extension, Caesars will ask lenders to convert original maturity revolver commitments to extended term loans, and commitments that are not converted, to be extended by three years to Jan. 28, 2017 at increased pricing.

The company said in an 8-K filed with the Securities and Exchange Commission that it would repay extended term loans held by any consenting revolver lender in an amount equal to 10% of the amount of the revolver commitment that was converted.

Additionally, 20% of extended revolver commitments will be terminated on a pro rata basis.

The revolver is sized at around $1.2 billion and priced at Libor plus 300 bps with a 50 bps unused fee.

Caesars to raise debt

With the amend and extend transaction, Caesars will be raising up to $1.25 billion of senior secured debt, with $1 billion of the proceeds going toward the repayment of some of the term loans held by extending lenders.

The first debt that would be taken out is non-extended B-1, B-2 and B-3 loans held by extending lenders, and, following that repayment, some of the new extended term loans would be paid down, the regulatory filing said.

Bank of America Merrill Lynch, the lead bank on the deal, is seeking consents toward the amendment by Feb. 10. Commitments toward the term loan extension will be due that day as well.

Caesars, a Las Vegas-based diversified casino-entertainment company, will offer lenders fees of 10 bps for consents and 15 bps for extensions.

Tronox tweaks deal

In more happenings, Tronox upsized its funded term loan to $550 million from $425 million and its six-month delayed-draw term loan to $150 million from $125 million, while reducing pricing on the tranches to Libor plus 325 bps from Libor plus 375 bps, according to a market source.

The six-year term loans still have a 1% Libor floor and 101 soft call protection for one year, and are being sold at an original issue discount of 99.

Commitments are due at noon ET on Friday and closing is targeted for Feb. 8.

Goldman Sachs & Co. and Deutsche Bank Securities Inc. are the lead banks on the now $700 million deal (Ba2/BB+), up from $550 million.

Tronox repaying debt

Proceeds from Tronox's new term loans will be used to refinance existing senior term loan borrowings, and the funds from the upsizing will be available for general corporate purposes, the source remarked.

Tronox obtained the debt commitment in connection with its proposed purchase of Exxaro Resources Ltd.'s mineral sands operations.

Closing on the acquisition is expected in the first half of this year, subject to the Securities and Exchange Commission registration timeline, Tronox shareholder approval and customary regulatory approvals.

Tronox is an Oklahoma City-based producer and marketer of titanium dioxide pigment.

Blue Coat sets OID

Blue Coat nailed down the original issue discount on its $85 million second-lien term loan (Caa1/B-) at 97, the wide end of the 97 to 98 talk, according to a market source, while leaving pricing unchanged at Libor plus 1,000 bps with a 1.5% Libor floor.

Meanwhile, pricing on the company's $360 million first-lien term loan (B1/BB-) firmed in line with initial talk at Libor plus 600 bps with a 1.5% Libor floor and an original issue discount of 98.

As before, the second-lien loan has hard call protection of 103 in year one, 102 in year two and 101 in year three, and the first-lien loan has 101 soft call protection for one year.

The company's $495 million senior secured credit facility also includes a $50 million revolver (B1/BB-).

Lead bank Jefferies & Co. expects to allocate the deal sometime next week.

Blue Coat funding buyout

Proceeds from Blue Coat's credit facility and roughly $479 million of equity will be used to fund the acquisition of the company by Thoma Bravo LLC and Ontario Teachers' Pension Plan for $25.81 in cash per share. The transaction is valued at roughly $1.3 billion.

Total leverage is around 3.75 times.

Closing is expected this quarter, subject to customary conditions, including regulatory and shareholder approvals.

Blue Coat is a Sunnyvale, Calif.-based provider of web security and WAN optimization services.

U.S. Security trims OID

U.S. Security moved the original issue discount on its $40 million add-on term loan to 99½ from talk of 98½ to 99, according to a market source.

Pricing on the loan matches existing term loan pricing at Libor plus 475 bps with a 1.25% Libor floor, but, when obtained last year, the existing loan was sold at 99.

Goldman Sachs & Co. is the lead bank on the deal that will be used to fund an acquisition.

U.S. Security Associates is a Roswell, Ga.-based security firm.

ACCO discloses guidance

Also in the primary, ACCO Brands held its bank meeting on Thursday afternoon, and with the launch, price talk on the $920 million senior secured credit facility (Ba2/BB+/BB+) was announced, according to a market source.

The $250 million revolver and $300 million term loan A are talked at Libor plus 300 bps, and the $370 million term loan B is talked at Libor plus 375 bps with a 1% Libor floor, an original issue discount of 99 and 101 soft call protection for one year, the source said.

Under the original commitment letter, the company was planning an $845 million senior secured credit facility, comprised of a $670 million seven-year term loan B and a $175 million five-year multicurrency asset-based revolver. However, it had been known for a while that the structure would likely change to include a term loan A tranche and a cash-flow revolver instead of an asset-based revolver. Upon coming out with the bank meeting date earlier this week, the details on the revised tranching surfaced.

Another difference is that the original commitment had term loan B pricing expected at Libor plus 475 bps with a 1.25% Libor floor.

ACCO lead banks

Barclays Capital Inc., Bank of America Merrill Lynch and Bank of Montreal are the lead banks on ACCO's credit facility and are seeking commitments toward the deal in two weeks.

Proceeds, along with $270 million of notes, will be used to fund the roughly $860 million merger with MeadWestvaco's office supplies business, repay ACCO's 10 5/8% senior secured notes and for ongoing working capital requirements.

As part of the agreement, MeadWestvaco will establish a separate entity to hold the consumer & office products business, the shares of which will be distributed to MeadWestvaco shareholders in a tax-free transaction in return for a $460 million dividend. Immediately after the spin-off and distribution, the newly formed company will merge with ACCO.

ACCO, a Lincolnshire, Ill.-based office supply manufacturer, expects to close on the transaction in the first half of the year, subject to shareholder and regulatory approvals.

Citadel Plastics pricing

Another company to hold a bank meeting was Citadel Plastics, at which time its $185 million credit facility was presented with talk of Libor plus 550 bps with a 1.5% Libor floor and an original issue discount of 98, according to a market source.

The facility consists of a $30 million five-year revolver and a $155 million six-year term loan.

GE Capital Markets and KeyBanc Capital Markets LLC are leading the deal that will be used to help fund the buyout of the company by Huntsman Gay Global Capital from Wind Point Partners.

Citadel Plastics is a Chicago-based provider of thermoset and thermoplastic compounds.

Focus Brands floats talk

Focus Brands emerged with plans to hold a bank meeting on Monday to launch a proposed $435 million credit facility, and began circulating price talk on the deal, according to a market source.

The $15 million five-year revolver and $290 million six-year first-lien term loan B are talked at Libor plus 550 bps, and the $130 million 61/2-year second-lien term loan is talked at Libor plus 900 bps, with all tranches having a 1.25% Libor floor, the source said. The revolver has a 75 bps unused fee.

Both term loans are being offered with an original issue discount of 98, and call premiums are 101 soft call for one year on the first-lien term loan and 103 in year one, 102 in year two and 101 in year three on the second-lien loan, the source continued.

Credit Suisse Securities (USA) LLC is the lead bank on the deal.

Focus dividend recap

Proceeds from Focus Brands' credit facility will be used to take out existing loan borrowings and fund a dividend.

The debt being repaid includes the company's term loan that closed early last year with a size of $251.3 million and pricing of Libor plus 400 bps with a 1.25% Libor floor. The loan had been sold at par and included 101 soft call protection.

With the new transaction, leverage through the first-lien will be 4.0 times and through the second-lien will be 5.8 times, the source added.

Focus Brands is an Atlanta-based franchisor and operator of ice cream stores, bakeries, restaurants and cafes.

Hamilton Lane readies deal

Hamilton Lane was another deal to pop up, with the company setting a bank meeting for Tuesday to launch a proposed $165 million credit facility, according to a market source.

The facility consists of a $10 million revolver and a $155 million term loan, the source said.

Goldman Sachs & Co. is the lead bank on the deal that will be used to help fund the acquisition of a minority interest in the company.

Hamilton Lane is a financial institution that provides discretionary and non-discretionary private equity asset management services.

TransDigm well received

In other news, TransDigm Group Inc.'s $500 million add-on senior secured covenant-light term loan (Ba2/BB-) due Feb. 14, 2017 is already "way oversubscribed" since just launching with a conference call on Monday, according to a market source.

The term loan is talked at Libor plus 325 bps with a 1% Libor floor and an original issue discount of 99, and includes 101 soft call protection for one year.

Commitments are due on Wednesday and closing and funding is expected on Feb. 13, pending regulatory approval.

Credit Suisse Securities (USA) LLC and UBS Securities LLC are the lead banks on the deal

TransDigm leverage multiples

With this transaction, TransDigm's total senior secured debt will be 2.9 times, total debt will be 5.2 times and net debt to EBITDA will be 5.0 times.

Proceeds from the term loan, along with cash on hand, will fund the $750 million purchase of AmSafe Global Holdings Inc. from Berkshire Partners LLC and Greenbriar Equity Group LLC.

In connection with the new deal, the company is looking to amend its existing credit facility to permit the incurrence of the term loan and leave the existing $500 million accordion feature unchanged.

Also, the existing revolver is expected to be increased to $300 million from $245 million.

TransDigm is a Cleveland-based maker of aircraft components.

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