Cengage Learning, Accuvant break; Eyemart Express, Capella Healthcare revisions surface

By Sara Rosenberg

New York, Dec. 15 – Cengage Learning Acquisitions Inc.’s add-on term loan made its way into the secondary market on Monday with the debt seen bid in line with its original issue discount.

Also, Accuvant set pricing on its first-lien term loan at the high end of revised guidance while modifying the original issue discount, firmed the spread on its second-lien term loan at the wide of talk and then freed up for trading as well.

In more happenings, Eyemart Express LLC tightened the spread and original issue discount on its term loan B, Capella Healthcare Inc. lowered pricing on its term loan and Vogue International pulled its add-on term loan from market.

Cengage frees up

Cengage Learning’s fungible $300 million tack-on covenant-light senior secured term loan due March 31, 2020 began trading on Monday with levels quoted at 99 bid, 99½ offered, according to a trader.

Pricing on the tack-on term loan is Libor plus 600 basis points with a 1% Libor floor, which matches the existing term loan, and it was sold at an original issue discount of 99. The tack-on loan and the existing $1,741,000,000 term loan are getting 101 soft call protection for six months.

Credit Suisse Securities (USA) LLC is leading the deal that will be used to fund a dividend to shareholders.

The dividend is expected to be paid on Dec. 30.

As part of the transaction, existing lenders are being paid a 25 bps amendment fee. This fee was added during syndication.

Cengage is a Stamford, Conn.-based provider of teaching, learning and research services for the academic, professional and library markets.

Accuvant tweaks deal

Accuvant finalized pricing on its $300 million seven-year first-lien covenant-light term loan (B1/B) at Libor plus 525 bps, the wide end of revised talk of Libor plus 500 bps to 525 bps and up from initial talk of Libor plus 450 bps to 475 bps, and changed the original issue discount to 98 from revised talk of 98½ and initial talk of 99, according to a market source.

As before, the first-lien term loan has a 1% Libor floor and 101 soft call protection for one year.

When the first pricing update was announced, the soft call protection had been extended from six months.

Regarding the $125 million eight-year second-lien covenant-light term loan (Caa1/CCC+), the spread firmed at Libor plus 900 bps, the high end of the Libor plus 875 bps to 900 bps talk, while the 1% Libor floor, discount of 99 and hard call protection of 102 in year one and 101 in year two were unchanged, the source said.

Accuvant starts trading

With final terms in place, Accuvant’s loans allocating and broke for trading with the first-lien term loan quoted at 98½ bid and the second-lien term loan quoted at 99½ bid, the source added.

Goldman Sachs Bank USA and Societe Generale are leading the term loans.

Proceeds from the $425 million of term loans will be used to help fund the company’s merger with FishNet Security, an Overland Park, Kan.-based provider of information security services.

Blackstone private equity funds will maintain majority ownership in the combined company, and current investors of both organizations, including existing management, the private equity firm Sverica International and FishNet Security’s corporate owner, Investcorp, are maintaining minority equity interests.

Closing is expected in the first quarter of 2015, subject to regulatory approvals.

Accuvant is a Denver-based provider of information security services.

Eyemart revisions emerge

Back in the primary, Eyemart Express reduced pricing on its $300 million seven-year covenant-light term loan B to Libor plus 400 bps from Libor plus 425 bps and moved the original issue discount to 99½ from 99, a market source remarked.

The term B still has a 1% Libor floor and 101 soft call protection for six months.

The company’s $330 million credit facility (B1/B) also includes a $30 million five-year revolver.

Allocations are expected on Tuesday, the source added.

Wells Fargo Securities LLC is leading the deal that will be used with around $390 million in equity to fund the buyout of the company by Friedman Fleischer & Lowe LLC.

Eyemart is a Texas-based eyewear company.

Capella cuts pricing

Capella Healthcare trimmed the spread on its $100 million seven-year first-lien covenant-light term loan (Ba2/BB-) to Libor plus 425 bps from Libor plus 450 bps and eliminated the MFN sunset provision, according to a market source.

As before, the loan has a 1% Libor floor, an original issue discount of 99 and 101 soft call protection for six months.

Recommitments were due at 5 p.m. ET on Monday and allocations are expected on Tuesday.

Credit Suisse Securities (USA) LLC and Citigroup Global Markets Inc. are leading the deal that will fund the acquisition of Carolina Pines Regional Medical Center and its related outpatient services from Community Health Systems Inc.

The transaction is subject to customary regulatory approvals.

Capella Healthcare is a Franklin, Tenn.-based developer and operator of health care facilities. The Carolina Pines Regional Medical Center is comprised of an acute care hospital and an adjoining medical office building in Hartsville, S.C.

Vogue pulls loan

Vogue International withdrew from the primary market its fungible $205 million add-on term loan that was talked at Libor plus 450 bps to 475 bps with a 1% Libor floor, an original issue discount of 99 and 101 soft call protection for one year, a market source said.

Goldman Sachs Bank USA and Bank of America Merrill Lynch were leading the deal.

Proceeds were going to be used to fund a dividend.

Vogue is a Tampa Bay, Fla.-based manufacturer and distributor of salon-heritage hair care and other personal care products.

Distribution International closes

In other news, Distribution International Inc.’s buyout by Advent International Inc. from Audax Private Equity has been completed, according to a news release.

For the transaction, Distribution International got a $215.5 million seven-year covenant-light term loan B (B3/B) priced at Libor plus 500 bps with a 1% Libor floor and sold at an original issue discount of 99. This debt has 101 soft call protection for six months.

Bank of America Merrill Lynch, RBC Capital Markets LLC and BMO Capital Markets Corp. led the deal.

Distribution International is a Houston-based distributor of insulation, related specialty fabricated products and safety supplies.

Varsity Brands wraps

Varsity Brands Inc.’s buyout by Charlesbank Capital Partners has closed, a news release said. The company’s senior leadership remained in their current positions and invested in the company alongside Charlesbank.

To help fund the buyout, Varsity Brands got a $755 million seven-year covenant-light term loan B priced at Libor plus 500 bps with a 1% Libor floor and it sold at an original issue discount of 99. There is 101 soft call protection for six months.

Goldman Sachs Bank USA, Barclays and Jefferies Finance LLC led the deal.

Varsity Brands is a Memphis, Tenn.-based portfolio of brands that promote student participation while celebrating academic and athletic achievement.

Compuware completes deal

Compuware Corp.’s buyout by Thoma Bravo LLC for about $10.75 per share in a transaction valued at around $2.5 billion closed, a news release said.

Funding for the transaction came in part from a $1,995,000,000 senior secured credit facility consisting of a $100 million revolver, a $340 million five-year first-lien covenant-light term loan B-1, a $950 million seven-year first-lien covenant-light term loan B-2, a $145 million one-year asset sale covenant-light bridge loan and a $460 million eight-year second-lien covenant-light term loan.

Pricing on the revolver is Libor plus 500 bps, pricing on the term loan B-1, term loan B-2 and asset sale loan is Libor plus 525 bps with a 1% Libor floor, and pricing on the second-lien term loan is Libor plus 825 bps with a 1% Libor floor. The term loan B-1 was issued at a discount of 98, the B-2 loan was issued at 95, the asset sale loan was issued at 99½ and the second-lien term loan was issued at 92.

Included in the B-1 and B-2 loans is 101 soft call protection for one year, and the second-lien loan is non-callable for one year, then at 102 in year two and 101 in year three.

Compuware lead banks

Jefferies Finance LLC, Credit Suisse Securities (USA) LLC and Deutsche Bank Securities Inc. led Compuware’s credit facility.

During syndication, pricing on the revolver was lifted from Libor plus 450 bps, the term loan B-1 was upsized from $300 million, pricing was raised from Libor plus 450 bps and the discount was revised from 99, and pricing on the B-2 loan was increased from talk of Libor plus 475 bps to 500 bps and the discount moved from 98½.

Also in syndication, the asset sale loan was upsized from $105 million and the spread was flexed from Libor plus 450 bps, and the second-lien term loan was trimmed from $550 million, pricing was lifted from Libor plus 800 bps, the discount was modified from 98, and the call protection was sweetened from 103 in year one, 102, in year two and 101 in year three.

About $50 million of the revolver was drawn to compensate for the $10 million total reduction in the amount of term loan debt being obtained and larger original issue discounts.

Compuware, a Detroit-based technology performance company, has net total leverage of about 5.5 times.

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