Universal Fiber Systems, NN, Physio-Control emerge in secondary; Xerium withdraws term loan

By Sara Rosenberg

New York, Oct. 2 – Universal Fiber Systems LLC’s credit facility freed up for trading during Friday’s market hours, with the first-lien term loan quoted above its original issue discount, and NN Inc. and Physio-Control International Inc. broke as well.

Meanwhile, in the primary, Xerium Technologies Inc. pulled its term loan from market, and Computer Sciences Government Services Inc. joined the near-term calendar with a launch for bank investors of its proposed credit facility.

Universal Fiber breaks

Universal Fiber Systems’ credit facility began trading on Friday, with the $165 million first-lien term loan (B1) quoted at 99 5/8 bid, 100 5/8 offered, according to a trader.

Pricing on the first-lien term loan is Libor plus 550 basis points with a 1% Libor floor, and it was sold at an original issue discount of 99. The debt has 101 soft call protection for six months.

The company’s $240 million credit facility also includes a $35 million revolver (B1) and a $40 million second-lien term loan (Caa1).

The second-lien term loan is priced at Libor plus 950 bps with a 1% Libor floor, and was issued at a discount of 98. This tranche has call protection of 102 in year one and 101 in year two.

Universal Fiber being acquired

Proceeds from Universal Fiber’s credit facility will be used to help fund its buyout by H.I.G. Capital.

BNP Paribas Securities Corp. and Goldman Sachs Bank USA are leading the deal.

During syndication, pricing on the first-lien term loan firmed at the high end of the revised Libor plus 525 bps to 550 bps talk and wide of initial talk of Libor plus 475 bps to 500 bps, the spread on the second-lien term loan was lifted from initial talk of Libor plus 850 bps to 875 bps, the initial excess cash flow sweep was increased to 75% from 50%, the “free and clear” accordion was reduced to $25 million from $50 million, the MFN sunset was eliminated, and the starter basket for the available amount was eliminated.

Universal Fiber is a Bristol, Va.-based manufacturer of synthetic fibers for the carpet and textile industries.

NN tops OID

NN’s credit facility broke too, with the $525 million seven-year covenant-light term loan quoted at 99 bid, a trader said.

Pricing on the term loan is Libor plus 475 bps with a 1% Libor floor, and it was issued at a discount of 98. There is 101 soft call protection for six months.

The other day, pricing on the term loan was lifted from talk of Libor plus 425 bps to 450 bps and the discount widened from 99.

The company’s $625 million senior secured deal (Ba3/BB-) also includes a $100 million five-year revolver.

NN lead banks

KeyBanc Capital Markets Inc., SunTrust Robinson Humphrey Inc. and Regions Capital Markets are leading NN’s credit facility.

Proceeds will be used to help fund the acquisition of Precision Engineered Products Holdings Inc. for $615 million and to refinance existing debt.

Closing is expected by the end of October, subject to customary conditions and regulatory approval.

NN is a Johnson City, Tenn.-based manufacturer of high precision metal bearing components, industrial plastic and rubber products and precision metal components. Precision Engineered is an Attleboro, Mass.-based manufacturer of highly engineered precision customized solutions for the medical, electrical, transportation and aerospace end markets.

Physio-Control frees up

Physio-Control’s new debt also hit the secondary market, with the $40 million incremental first-lien covenant-light term loan due June 5, 2022 seen at 98 bid, 99 offered, a trader remarked.

Pricing on the first-lien term loan is Libor plus 450 bps with a 1% Libor floor, and it was sold at an original issue discount of 98, after widening during syndication from 99. The tranche has 101 soft call protection through Dec. 5, 2015.

The company is also getting a $20 million incremental second-lien covenant-light term loan due June 5, 2023 priced at Libor plus 900 bps with a 1% Libor floor. This debt has call protection of 102 through June 5, 2016 and 101 through June 5, 2017.

Recently, the second-lien term loan was downsized from $23 million and the original issue discount widened from 98 but the final discount was not available prior to press time, a source said.

Physio buying HeartSine

Proceeds from Physio-Control’s incremental term loans will be used to fund the acquisition of HeartSine Technologies.

Citigroup Global Markets Inc. is leading the financing.

Physio-Control is a Redmond, Wash.-based developer, manufacturer, seller and servicer of external defibrillator/monitors and emergency medical response products and services. HeartSince is a Northern Ireland-based automated external defibrillator manufacturer.

Xerium shelves loan

Switching to the primary, Xerium Technologies pulled its $495 million seven-year covenant-light term B (B2/B) from market as a result of poor conditions, a source remarked.

Talk on the term loan had been Libor plus 500 bps with a 1% Libor floor and an original issue discount of 99.

Bank of America Merrill Lynch, Jefferies Finance LLC and Macquarie Capital (USA) Inc. were leading the deal that was going to be used to refinance existing debt.

Xerium is a Youngsville, N.C.-based provider of industrial consumables and services, manufacturing clothing and roll covers for the paper industry.

Computer Sciences on deck

Computer Sciences Government Services scheduled a bank meeting in New York on Tuesday to launch its $3.5 billion senior secured credit facility (BB+) to bank investors, according to a market source, who said that a bank meeting for institutional investors has not yet been set.

The credit facility includes a $500 million revolver and $3 billion in term loan A and term loan B debt, with term loan tranche sizes still to be determined, the source continued.

Mitsubishi UFJ Financial Group (MUFG) and RBC Capital Markets are leading the deal that will be used to fund the spin-off of the company from Computer Sciences Corp. and to fund the acquisition of SRA.

With the spin-off, Computer Sciences will be paid a $10.50 per share special cash dividend, the purchase price for SRA from Providence Equity Partners, SRA’s founder, Dr. Ernst Volgenau, and management, is $390 million, and SRA’s existing $1 billion of net debt will be refinanced.

Computer Sciences Government Services is a Falls Church, Va., provider of IT services to the U.S. federal government. SRA is a Fairfax, Va.-based provider of IT and professional services to the U.S. federal government.

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