Hertz softer to unchanged with Dollar Thrifty purchase; Excelitas Technologies frees up

By Sara Rosenberg

New York, Aug. 27 - Hertz Global Holdings Inc.'s term loan was slightly lower to unchanged during Monday's trading session with news that it is acquiring Dollar Thrifty Automotive Group Inc. and adding more debt to its capital structure.

Also in the secondary market, Excelitas Technologies Corp.'s add-on loan broke for trading, Navistar International Corp.'s term loan was unfazed with an announcement of management changes and a Bid-Wanted-In-Competition (BWIC) surfaced around midday.

Hertz down to flat

Hertz's term loan was a bit weaker to unchanged in the secondary market on Monday after the company announced that it is buying Dollar Thrifty for $87.50 per share, or about $2.6 billion, according to market sources.

The term loan was quoted at 99 bid, 99½ offered, down about half a point on the news, the source said. Another source, however, was quoting the loan at 99 bid, par offered, and he said that levels were pretty much in line with where he was seeing the debt on Friday.

To fund the transaction, Hertz has a commitment from Barclays, Bank of America Merrill Lynch and Deutsche Bank for a $1.95 billion 365-day unsecured bridge loan, of which a majority is expected to be replaced with bonds and the rest will be replaced with an incremental term loan.

Pricing on the bridge loan is Libor plus 537.5 basis points, increasing by 50 bps every three months until a cap. There is a 1% Libor floor.

Hertz leverage multiples

Pro forma for the transaction, Hertz's total debt to EBITDA will be 3.7 times, compared to standalone total debt to EBITDA of 3.2 times. And, pro forma total debt to gross EBITDA will be 4 times, versus 3.6 times on a standalone basis.

The company expects to be on credit watch initially, but does not anticipate credit rating downgrades, and management said in a conference call that it remains committed to reducing leverage over time and obtaining an investment grade rating.

Closing on the acquisition is expected in mid-to-late October, subject to the tender of a majority of Dollar Thrifty's common stock, regulatory clearance by the Federal Trade Commission and other customary conditions.

Hertz is a Park Ridge, N.J.-based auto and equipment rental company. Dollar Thrifty is a Tulsa, Okla.-based renter and leaser of vehicles.

Excelitas begins trading

Excelitas Technologies' $23 million add-on term loan made its way into the secondary market in the morning, with levels quoted at 98¼ bid, 99 offered, according to a market source. The new debt trades with the existing term loan.

Pricing on the add-on due in November 2016 is Libor plus 400 bps with a 1% Libor floor, and it was sold at an original issue discount of 98. There is 101 soft call protection for one year.

With the add-on, the company is amending its existing credit facility to revise pricing on the term loan to Libor plus 400 bps (to match the add-on) from Libor plus 375 bps and add the one year of 101 soft call protection.

Lenders were offered a 10 bps amendment fee.

Excelitas funding acquisition

Proceeds from Excelitas Technologies' add-on term loan, which is being led by UBS Securities LLC, will be used to finance an acquisition.

Secured leverage will be 3.5 times, up from 3.3 times currently, but total leverage will stay at 4.9 times.

Excelitas is a Waltham, Mass.-based provider of specialty lighting and sensor components, subsystems and integrated products to OEMs for health, environmental and security segments.

Navistar relatively steady

In more trading happenings, Navistar's new term loan B was seen at par ¼ bid, par ¾ offered, versus levels of par 3/8 bid, par 5/8 offered on Friday, as the company disclosed that its chairman, president and chief executive officer, Daniel C. Ustian, is retiring effective immediately.

Lewis B. Campbell, former chairman, president, and chief executive officer of Textron Inc., has been named as executive chairman of the board of directors and interim chief executive officer.

Also, Troy A. Clarke has been promoted to president and chief operating officer from president of truck and engine operations.

Navistar is a Lisle, Ill.-based manufacturer of commercial and military trucks, buses, RVs and diesel engines.

BWIC emerges

Also, a roughly $133.1 million BWIC was announced on Monday, and investors are being given until noon ET on Tuesday to place their bids, according to a trader.

The portfolio includes a little over 60 companies.

Some of the larger pieces of debt being offered are for DJO Global's extended term loan, Dollar General's extended term loan C, First Data's extended 2018 Dollar term loan, Freescale Semiconductor Inc.'s extended term loan, interactive Data Corp.'s new term loan, Levi Strauss' loan and RGIS' non-extended initial term loan, the trader added.

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