Education Management reworks loan, breaks; Pinnacle frees up; Hawker slides with downgrade

By Sara Rosenberg

New York, March 29 - Education Management Corp. revised its incremental term loan, sweetening the coupon, original issue discount and call protection, and then it freed up for trading late Thursday above the new discount price.

Also, Pinnacle Foods Finance LLC's new term loan E and extended term loan made their way into the secondary market, and Hawker Beechcraft Inc.'s strip of institutional bank debt headed lower with news of a ratings downgrade by Standard & Poor's.

In more loan happenings, Charter Communications Operating LLC, Press Ganey Associates Inc., Plato Learning, PQ Corp., ProQuest LLC and Physiotherapy Associates set price talk, and Key Safety Systems Inc. disclosed discount guidance with their launches.

Furthermore, Endurance International Group and SLS Las Vegas revealed talk on their upcoming loans, Aptalis Pharma Inc. announced new deal plans, and more details on EP Energy Corp.'s buyout financing emerged, with the debt expected to include a term loan B.

Education Management tops OID

Education Management made a number of investor-friendly changes to its $350 million six-year incremental term loan (B2/BB) and then broke for trading late Thursday at 97½ bid, 98½ offered, according to market sources.

Under the revised terms, the loan is priced at Libor plus 700 basis points with a 1.25% Libor floor and an original issue discount of 97, compared to initial talk at launch Libor plus 525 bps with a 1.25% floor and a discount of 981/2, sources said.

Also, the loan was changed to be non-callable for two years then at par, versus earlier talk of 101 soft call protection for one year, sources added.

Bank of America Merrill Lynch, Barclays Capital Inc. and Goldman Sachs & Co. are leading the deal that will be used to refinance a non-extended term loan C due June 2013.

Leverage is 1.8 times on a senior secured basis, 2.4 times total and 3.3 times rent adjusted.

Education Management is a Pittsburgh-based provider of private post-secondary education.

Pinnacle Foods frees up

Pinnacle Foods' new $400 million 61/2-year term loan E (Ba3/B+) began trading as well, with levels quoted by traders at 99¾ bid, par ¾ offered on the open, and then one source saw it move up to par bid, 101 offered.

Also, the company's roughly $650 million extended term loan broke too, with levels seen at 99½ bid, par ½ offered, one trader added.

Pricing on the term loan E, the extended term loan and a new $150 million five-year revolver (Ba3/B+) is Libor plus 350 bps. Non-extended term loan B pricing is Libor plus 250 bps.

The term loan E has a pricing step-down upon an initial public offering and 5.0 times total leverage ratio, as well as a 1.25% Libor floor, and it was sold at an original issue discount of 99. Both the new debt and the extended loan have 101 soft call protection for one year.

Pinnacle refinancing

Proceeds from Pinnacle Foods' new term loan E will be used to repay a roughly $313 million term loan D that was obtained in 2010 at pricing of Libor plus 425 bps with a 1.75% Libor floor and to redeem all $199 million of its 10 5/8% notes.

Barclays Capital Inc, Bank of America Merrill Lynch, J.P. Morgan Securities LLC and Macquarie Capital are the lead banks on the deal.

During syndication, pricing on the E loan was flexed down from Libor plus 375 bps and the 101 soft call was added to the extended loan.

The extension pushed out the maturity of just over half of the existing $1.2 billion term loan B by 2½ years to October 2016.

Lenders were offered a 10 bps amendment fee and a 15 bps extension fee.

Pinnacle Foods is a Mountain Lakes, N.J.-based packaged foods company.

Hawker strip softens

Hawker Beechcraft's strip of bank debt traded lower as the company's corporate credit rating was lowered by Standard & Poor's to CC from CCC with a negative outlook, according to a trader.

The strip was quoted at 73½ bid, 75 offered, down from 74 bid, 76 offered, the trader said.

Standard & Poor's said that the downgrade follows Hawker Beechcraft's announcement that it reached a forbearance agreement through June 29 with about 70% of its lenders to defer interest payments on the revolver and term loans and get covenant relief.

"The negative outlook reflects the likelihood that we will lower the corporate credit rating to SD and the issue rating on the credit facility to D if the company does not make its next payment due March 30," the rating agency explained.

When announcing the forbearance, the company also said that it got a new $120 million incremental term loan to fund ongoing operations as it works with lenders on a recapitalization.

Hawker Beechcraft is a Wichita, Kan.-based manufacturer of business, special mission, light attack and trainer aircraft.

Charter D loan pricing

Moving to the primary, Charter Communications launched its $750 million seven-year term loan D with a bank meeting on Thursday morning, at which time lenders were told that the debt is talked at Libor plus 300 bps with a 1% Libor floor and an original issue discount in the 99 area, according to a market source.

Bank of America Merrill Lynch, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., J.P. Morgan Securities LLC and UBS Securities LLC are leading the $1.85 billion credit facility (Ba1/BB+/BB+), which also includes a $1.1 billion five-year revolver.

Proceeds will be used to refinance a roughly $78 million term loan B-1 due March 6, 2014 that is priced at Libor plus 200 bps, a roughly $10 million term loan B-2 due March 6, 2014 that is priced at Libor plus 500 bps with a 3.5% Libor floor and a portion of a roughly $3 billion term loan C due Sept. 6, 2016 that is priced at Libor plus 325 bps.

Charter is a St. Louis-based cable operator and broadband communications company.

Press Ganey reveals talk

Another company to hold a morning bank meeting and release pricing guidance was Press Ganey, and lenders are being asked to get commitments in on the $445 million credit facility by the close of business on April 12, according to a market source.

The $20 million revolver and $335 million first-lien term loan B were presented to lenders with talk of Libor plus 400 bps, the source said. The revolver has no Libor floor and a 100 bps upfront fee, and the B loan has a 1.25% floor, an original issue discount of 99 and 101 soft call protection for one year.

As for the $90 million second-lien term loan, it was launched with talk of Libor plus 700 bps with a 1.25% floor, a discount of 99, and hard call protection of 102 in year one and 101 in year two.

Barclays Capital Inc., Goldman Sachs & Co. and GE Capital Markets are the lead banks on the refinancing deal that will result in first-lien leverage of 3.9 times, total leverage of 4.9 times total and net leverage of 4.7 times, the source added.

Press Ganey is a South Bend, Ind.-based provider of health care performance improvement services.

Plato discloses guidance

Plato Learning also held a bank meeting on Thursday morning, and with the launch, price talk on its $390 million credit facility was announced, according to a market source.

The $25 million five-year revolver and $240 million six-year first-lien term loan are talked at Libor plus 450 bps to 475 bps with a 1.25% Libor floor and an original issue discount of 981/2, the source said. Included in the term loan is 101 soft call protection for one year.

Meanwhile, the $125 million seven-year second-lien term loan is talked at Libor plus 875 bps to 900 bps with a 1.25% floor and a discount of 98, and there is call protection of 103 in year one, 102 in year two and 101 in year three, the source continued.

By comparison, a PREM14A filed with the Securities and Exchange Commission on Tuesday had the revolver and first-lien term loan expected at Libor plus 500 bps with a 1.5% Libor floor and the second-lien term loan expected at Libor plus 900 bps with a 1.5% floor.

Plato buying Archipelago

Proceeds from Plato Learning's credit facility and $60 million of equity will be used to fund the purchase of Archipelago Learning for $11.10 per share in cash. The transaction has an equity value of about $291 million.

Credit Suisse Securities (USA) LLC and Jefferies & Co. leading the credit facility, for which commitments are due on April 17.

Closing on the acquisition is expected in the second quarter, subject to regulatory approvals and the approval of Archipelago Learning shareholders.

First-lien leverage is 3.8 times and total leverage is 5.9 times.

Plato is a Bloomington, Minn.-based provider of education technology solutions. Archipelago Learning is a Dallas-based subscription-based software-as-a-service provider of education products.

PQ talk surfaces

PQ launched its $200 million add-on first-lien term loan with a call in the morning, and price talk came out at Libor plus 375 bps with no Libor floor and an original issue discount of 98, a market source said.

The company is also looking to amend its credit facility to allow for the add-on, and will reprice its existing term loan to Libor plus 375 bps from Libor plus 325 bps, the source remarked.

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

Proceeds from the add-on will be used to repay revolver debt and commitments are being asked for by April 6.

PQ is a Malvern, Pa.-based producer of specialty chemicals and catalysts.

ProQuest releases details

ProQuest's bank meeting took place as well, and size, structure and price talk were disclosed with the launch, according to a market source.

The facility (Ba3) will total up to $190 million, consisting of a maximum $40 million five-year revolver and a maximum $150 million six-year term loan B, the source said.

Price talk on the term loan B is Libor plus 450 bps to 475 bps with a 1.25% Libor floor and an original issue discount of 99, and there is 101 soft call protection for one year, the source continued.

Commitments are due on April 10.

Morgan Stanley Senior Funding Inc. and Bank of America Merrill Lynch are leading the deal that will be used to refinance an existing first-lien credit facility and for general corporate purposes.

ProQuest is an Ann Arbor, Mich.-based electronic publisher and microfilm publisher.

Physiotherapy pricing

Physiotherapy Associates announced talk of Libor plus 500 bps with a 1.5% Libor floor and an original issue discount of 98 on its $125 million credit facility that was presented to lenders on Thursday, according to a market source.

The facility consists of a $25 million five-year revolver and a $100 million six-year term loan B.

Jefferies & Co., GE Capital Markets and RBC Capital Markets LLC are leading the deal that will be used, along with $210 million of senior notes, to fund the buyout of the company by Court Square Capital Partners from Water Street Healthcare Partners and Wind Point Partners.

Physiotherapy Associates is an Exton, Pa.-based provider of outpatient rehabilitation services.

Key Safety OID

Key Safety Systems came out with original issue discount guidance in the 96 area on its $75 million add-on term loan B in connection with its conference call on Thursday, according to a market source.

Pricing on the add-on due March 2014 is Libor plus 225 bps, in line with existing B loan pricing.

Commitments are due on April 10, the source said.

UBS Securities LLC and Citigroup Global Markets Inc. are leading the deal that will be used to refinance revolver borrowings and provide additional liquidity.

Key Safety Systems is a Sterling Heights, Mich.-based supplier of automotive safety components and systems.

Preferred Sands launches

Preferred Sands LLC launched its $125 million add-on term loan B (B2) due Dec. 15, 2016 with a call on Thursday at previously announced talk of Libor plus 600 bps with a 1.5% Libor floor and an original issue discount of 98.

The coupon and floor are in line with existing pricing, but when done in December 2011, the existing term loan B due Dec. 15, 2016 was sold at a discount of 971/2. The new and existing debt both have 101 soft call protection through Dec. 15, 2012.

Commitments towards the add-on are due on April 5, a source said.

Barclays Capital Inc. is the lead bank on the deal that will be used to acquire some class A minority investor interests, fund a distribution to remaining investors and for general corporate purposes.

Leverage is 4.4 times on a secured and gross basis, versus 4 times currently.

Preferred Sands is a Radnor, Pa.-based provider of silica sand products.

Endurance readies deal

Endurance International has set a bank meeting for 2 p.m. ET on Monday to launch a $535 million six-year term loan B that is being talked at Libor plus 625 bps with a 1.5% Libor floor, an original issue discount of 99 and 101 soft call protection for one year, according to a market source.

Credit Suisse Securities (USA) LLC is the lead bank on the deal that will be used to redeem preferred notes held by Accel-KKR, to refinance an existing $350 million term loan B that is priced at Libor plus 625 bps with a 1.5% floor, and to add cash to the balance sheet.

When done in December 2011, the existing term loan B was and sold at a discount of 98.

Included in the existing loan is 101 repricing protection for one year, but since this is a refinancing and pricing is expected to be unchanged, the call premium does not apply in this case, the source added.

Endurance is a Burlington, Mass.-based provider of web hosting and online services to small- and medium-sized businesses.

SLS floats guidance

SLS Las Vegas will also be holding a bank meeting on Monday, and talk on its $300 million five-year term loan B emerged at Libor plus 850 bps with a 2% Libor floor and an original issue discount of 98, according to a market source.

J.P. Morgan Securities LLC is the lead bank on the loan that is non-callable for two years, then at 102 in year three and 101 in year four, the source said.

Proceeds will be used to fund the renovation of the SLS Las Vegas (formerly the Sahara Hotel and Casino).

SLS Las Vegas is a Las Vegas-based hotel and casino operator.

Aptalis plans add-on

Aptalis Pharma (formerly Axcan Holdings Inc.) has scheduled a conference call for Friday to launch a $200 million five-year senior secured incremental term loan B, according to a market source, who said price talk is not yet available.

Bank of America Merrill Lynch, Barclays Capital Inc. and RBC Capital Markets LLC are the lead banks on the deal that will be used to prepay $195 million of senior unsecured notes.

Aptalis is a Bridgewater, N.J.-based specialty pharmaceutical company.

EP Energy may launch soon

EP Energy may be launching its buyout financing as early as next week, and as of now, the deal is expected to include a $500 million term loan B in addition to a $2 billion reserve-based revolver, according to a market source.

The term loan B would be used to replace a portion of the $3.5 billion bridge loan commitment received by the company, with the rest of the bridge expected to be taken out by $500 million of secured bonds and $2.5 billion of unsecured bonds, the source said.

Timing on the transactions as well as final sizes are still fluid, the source added.

When the bridge loan was launched to investors earlier this month, it was said that up to $1.5 billion of secured debt consisting of term loan borrowings and/or bonds could be used for the replacement of the bridge.

EP Energy lead banks

Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., BMO Capital Markets Corp., RBC Capital Markets, UBS Securities LLC and Nomura are the lead banks on EP Energy's debt financing, with Citi the left lead on the bridge loan and JPMorgan the left lead on the revolver.

Under the agreement, EP Energy is being acquired by Apollo Global Management LLC, Riverstone Holdings LLC, Access Industries Inc. and other investors for about $7.15 billion from El Paso Corp.

In addition to the $3.5 billion of term loan B and bond financing and a $1 billion draw under the revolver, the company will use $3 billion of equity for the transaction.

Closing is expected in the second quarter, subject to the completion of the acquisition of El Paso by Kinder Morgan Inc.

EP Energy is a Houston-based oil and natural gas exploration and production company.

AMN sees strong demand

In other news, AMN Healthcare Services Inc.'s $250 million credit facility (Ba2/BB-) has seen a lot of interest from investors, resulting in the deal being well oversubscribed by Thursday's commitment deadline, according to a market source.

The facility consists of a $50 million five-year revolver and a $200 million six-year term loan B.

Talk on the term loan B is Libor plus 500 bps with a 1.25% Libor floor, an original issue discount of 98½ and 101 soft call protection for one year.

Prior to the March 15 launch, early guidance on the B loan had been in the Libor plus 500 bps area with a 1.25% to 1.5% floor.

SunTrust Robinson Humphrey Inc. and GE Capital Markets are the lead banks on the deal that will be used to refinance existing debt.

AMN is a San Diego-based health care staffing and workforce services company.

Mercury wraps repricing

Mercury Payment Systems LLC completed the repricing of its $199 million term loan (B1) to Libor plus 400 bps with a 1.5% Libor floor from Libor plus 500 bps with a 1.5% Libor floor, according to a market source. The repriced loan was sold at par and includes 101 soft call protection for one year.

During the negotiation process, the repriced deal was flexed down from Libor plus 425 bps but the Libor floor was increased from 1.25%.

Deutsche Bank Securities Inc., Barclays Capital Inc. and Credit Suisse Securities (USA) LLC led the deal.

Mercury Payment Systems is a Durango, Colo.-based payment processing company that partners with point-of-sale developers and resellers.

Rovi closes

Rovi Corp. completed its $800 million of term loans (Ba2/BB) consisting of a $585 million seven-year term loan B and a $215 million incremental term loan A priced at Libor plus 225 bps, according to an 8-K filed with the Securities and Exchange Commission on Thursday.

Pricing on the B loan is Libor plus 300 bps with a step-down to Libor plus 275 bps when total leverage is less than 4.0 times. There is a 1% Libor floor and 101 soft call protection for one year, and it was sold at an original issue discount of 991/2.

During syndication, the B loan was upsized from $550 million as the term loan A was downsized from $250 million, the step-down and call protection were added and the discount tightened from 99.

J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC were the joint lead arrangers and bookrunners, with Bank of America Merrill Lynch a bookrunner as well, on the deal that was used to refinance an existing term loan B and provide balance sheet flexibility.

Rovi is a Santa Clara, Calif.-based provider of digital entertainment services.

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