Valeant dips with incremental plans; U.S. Foodservice rises; Applied Systems frees up

By Sara Rosenberg

New York, May 30 - Valeant Pharmaceuticals International Inc.'s term loan B was a little softer in trading on Wednesday as the company announced intentions to raise an incremental tranche under its existing credit facility.

Also on the secondary front, U.S. Foodservice Inc.'s term loan was better as revisions were made to its amendment and extension proposal, and Applied Systems Inc.'s tack-on term loan allocated and freed up for trading, with levels quoted right around the original issue discount price.

Over in the primary, Rivers Pittsburgh Borrower LP made its term loan A upsizing official as the company priced a downsized bond offering, and Ferrara Candy Co. Inc. and LANDesk Software released price talk in connection with their launches.

Valeant weakens

Valeant Pharmaceuticals' term loan B headed lower in the secondary market on Wednesday with news of incremental term loan plans, according to a trader, who was quoting the debt at 98 bid, 99 offered, down from 98¼ bid, 99¼ offered.

In the morning, the Mississauga, Ont.-based specialty pharmaceutical company said in a news release that it will be syndicating a $500 million incremental term loan due 2019 with terms similar to the existing term loan B, with certain modifications.

Pricing on the existing loan is Libor plus 275 basis points with a 1% Libor floor, and it was sold at an original issue discount of 99½ in February. Included in the loan is 101 soft call protection for one year.

Proceeds from the new debt will be used to repay borrowings under an existing $275 million revolver and for general corporate purposes, including acquisitions.

A conference call to launch the Goldman Sachs & Co.-led incremental loan will take place on Thursday afternoon, a source added. Closing is targeted for June.

U.S. Foodservice gains

U.S. Foodservice's term loan moved up in trading to 96½ bid, 97½ offered from 96¼ bid, 97¼ offered as changes were made to an in market amendment and extension request, according to a trader.

The company is now looking to extend a portion of its roughly $1.94 billion term loan to 2017 from 2014 at pricing of Libor plus 425 bps with a 1.5% Libor floor, compared to the original request for extended pricing of Libor plus 450 bps with no floor, a source said. Non-extended term loan pricing is Libor plus 250 bps.

Furthermore, the company added 101 soft call protection for one year to the proposed extended term loan, the source remarked.

Lenders are still being offered a 10 bps amendment fee and a 15 bps extension fee.

Leads Citigroup Global Markets Inc. and KKR Capital Markets are seeking recommitments by noon ET on Thursday.

U.S. Foodservice is a Columbia, Md.-based broadline foodservice distributor.

Applied Systems breaks

In more trading news, Applied Systems' $85 million incremental first-lien term loan (B1/B+) due December 2016 hit the secondary market, with levels quoted at 99 bid, par offered, according to a source.

Pricing on the new loan is Libor plus 400 bps with a 1.5% Libor floor, and it was sold at an original issue discount of 99 after tightening the other day from 98.

Credit Suisse Securities (USA) LLC is the lead bank on the deal that is being used to fund an acquisition.

The company needed to amend its existing credit facility to allow for the add-on and the acquisition, and lender approval for the amendment was obtained last week.

Applied Systems is a University Park, Ill.-based provider of agency and brokerage management software.

Rivers firms upsizing

Moving to the primary, Rivers Pittsburgh set its term loan A size at $185 million, up from $160 million, a move that was discussed with lenders and approved last week, but did not finalize until the bonds were officially downsized on Wednesday to $275 million from $300 million, according to a market source.

The bonds priced at par to yield 9½%.

Pricing on the oversubscribed term loan A, as well as on a $15 million revolver, is Libor plus 375 bps (no grid), with the revolver having a 50 bps unused fee.

Wells Fargo Securities LLC is the lead bank on the $200 million five-year credit facility (B1/BB-) that will be used with the bonds and cash on hand to refinance $302 million of first-lien debt and about $184 million of senior preferred PIK interests.

Rivers Pittsburgh is a Pittsburgh-based casino operator.

Ferrara reveals guidance

Ferrara Candy held a bank meeting on Wednesday afternoon to launch its credit facility, and with the event, price talk on the $425 million term loan (B2/B) was announced at Libor plus 525 bps to 550 bps with a 1.25% Libor floor and an original issue discount of 98 to 99, according to a market source.

The $550 million credit facility also provides for a $125 million asset-based revolver.

Commitments are due early in the morning on June 8, the source added.

Morgan Stanley Senior Funding Inc. and Goldman Sachs & Co. are leading the deal that will be used to fund the creation of the general line candy manufacturer through the merger of Round Lake, Minn.-based Farley's & Sathers Candy Co. Inc. and Forest Park, Ill.-based Ferrara Pan Candy Co. Inc.

Closing is subject to applicable regulatory approval and satisfaction of other customary conditions.

LANDesk talk surfaces

LANDesk Software launched its credit facility, too, and price talk on the $205 million term loan came out at Libor plus 525 bps with a 1.25% Libor floor and an original issue discount of 99, according to a market source.

The company's $220 million credit facility also includes a $15 million revolver.

Wells Fargo Securities LLC is leading the deal that will be used for acquisition funding.

Commitments are due on June 12.

LANDesk is a Salt Lake City-based leading provider of systems lifecycle management, endpoint security, and IT service management solutions for desktops, servers and mobile devices.

Pacific Architects eyed

Pacific Architects and Engineers' $200 million five-year pro rata credit facility was "tracking well" ahead of its Wednesday commitment deadline, and the plan is to close at initial terms, according to a market source.

The facility consists of a $150 million revolver and a $50 million term loan A, both priced initially at Libor plus 325 bps with no Libor floor. The spread is tied to a leverage-based grid.

Upfront fees were offered at 37.5 bps for commitments of $25 million or more and 25 bps for commitments of $15 million or more.

RBC Capital Markets LLC and RBS Citizens are leading the deal that will be used to refinance existing credit facilities.

Total leverage will be around 2.2 times at close.

Pacific Architects is an Arlington, Va.-based provider of contract services to U.S. government agencies, international organizations and foreign governments.

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