SourceHOV sweetens terms on first- and second-lien loans; INC Research accelerates deadline

By Sara Rosenberg

New York, Oct. 27 – In the loan market on Monday, SourceHOV LLC widened spreads and the original issue discounts on its first- and second-lien term loans, shortened maturities on the tranches and adjusted the second-lien call protection.

Also, INC Research LLC moved up the commitment deadline on its credit facility, and Panda Stonewall joined this week’s new deal calendar.

SourceHOV changes emerge

SourceHOV increased price talk on Monday on its $780 million first-lien term loan B (B1/B) to Libor plus 650 basis points to 675 bps from Libor plus 525 bps, moved the original issue discount to 97 from 99 and modified the maturity to five years from six years, according to a market source, who said the 1% Libor floor and 101 soft call protection for one year were unchanged.

Amortization on the first-lien term loan is 2.5% in year one and 5% per annum thereafter.

Additionally, price talk on the $250 million second-lien term loan (Caa1/CCC+) was lifted to Libor plus 1,025 bps to 1,050 bps from Libor plus 875 bps, the discount widened to 96 from 98½, the maturity was shortened to 5½ years from 6½ years, and the call protection was changed to non-callable for one year, then at 103 in year two, 102 in year three and 101 in year four from 102 in year one and 101 in year two, the source said. This tranche still has a 1% Libor floor.

SourceHOV tweaks incremental

Along with the pricing revision, SourceHOV modified the incremental allowance to the greater of $125 million, shared with the second-lien loan, and amounts up to net first-lien leverage of 3.5 times, from $175 million and amounts up to net first-lien leverage of 3.75 times.

Also, the excess cash flow sweep was raised to 75% with step-downs to 50% at net total secured leverage of 4.25 times, 25% at leverage of 3.75 times and 0% at leverage of 3 times, and the leveraged ratio calculation was changed so that the cap on cash allowed to be netted against debt was set at $40 million, the source continued.

Recommitments for the company’s $1,105,000,000 credit facility, which includes a $75 million revolver (B1/B) as well, are due at 5 p.m. ET on Tuesday, the source added.

SourceHOV buying BancTec

SourceHOV’s credit facility is in connection with its acquisition of BancTec Group and will be used to refinance existing debt, redeem certain existing SourceHOV equity holders and provide additional working capital.

Morgan Stanley Senior Funding Inc. is leading the credit facility.

With the acquisition, which is expected to close this year, subject to customary conditions, including regulatory approvals, stockholders of BancTec will receive stock in SourceHOV.

SourceHOV and BancTec are Dallas-based providers of transaction processing services.

INC Research revises deadline

INC Research accelerated the commitment deadline on its $525 million credit facility to noon ET on Wednesday from Thursday, a market source said.

The facility consists of a $100 million five-year revolver, and a $425 million seven-year term loan B talked at Libor plus 375 bps to 400 bps with a 25 bps step-down after a minimum $75 million initial public offering and leverage of less than 4 times, a 1% Libor floor, an original issue discount of 99 and 101 soft call protection for six months.

Goldman Sachs Bank USA, Credit Suisse Securities (USA) LLC, ING Capital Markets, RBC Capital Markets and Wells Fargo Securities LLC are leading the deal that will be used to refinance existing debt.

INC Research is a Raleigh, N.C.-based therapeutically focused contract research organization.

Panda Stonewall on deck

In more primary news, Panda Stonewall set a bank meeting for 10 a.m. ET on Wednesday to launch $475 million of term loans, according to a market source.

The debt consists of a $325 million funded term loan and a $150 million delayed-draw term loan, the source said.

Goldman Sachs Bank USA is the left lead on the deal that will be used to fund construction of the Panda Stonewall Power Project by the Panda Power Funds, and partners Bechtel Development and Green Energy Partners/Stonewall.

Panda Stonewall is a clean natural gas-fueled 778-megawatt combined-cycle generating station in Loudoun County, Va.

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