1-800 Contacts flexes pricing; Mattress Firm sets talk; Petco outlines changes

By Paul A. Harris

Portland, Ore., Jan. 14 – Bank loans were trading in a narrow range on Thursday, with some names, especially the better quality credits, as much as ¼ point higher, according to a bank loan trader based on the East Coast of the United States.

Some of the lower quality credits have lately been down as much as ¼ of a point, the trader added.

“Given the volatility we’ve seen in stocks and high yield bonds loans have held in very well,” the source remarked.

Recent deals continue to trade well, the trader said.

The Microsemi Corp. Libor plus 450 basis points seven-year term loan B was 99½ bid, par offered on Thursday. The $1.7 billion deal priced at 97 in mid-December.

The more recently priced Pinnacle Foods Libor plus 300 bps term loan I was up 3/8 of a point. The $500 million deal allocated on Wednesday.

Among deals in the market, Petco Animal Supplies Inc. outlined changes to its $2.5 billion of seven-year covenant-light senior secured first-lien term loans (B1/B).

1-800 Contacts Inc. flexed pricing on its $500 million seven-year first-lien term loan (B1/B) to 425 bps from 450 to 475 bps and firmed the discount at 99, from discount talk of 98.5 to 99.

And Mattress Firm Holding Corp. talked its $730 million incremental first-lien term loan due Oct. 20, 2021 (Ba3/B+) with a 450- to 475-bps spread to Libor at 98.5 to 99.

Things could pick up in the primary market, the trader said, adding that there is buying interest among the CLOs.

Petco details changes

Petco outlined changes to $2.5 billion maximum of seven-year covenant-light senior secured first-lien term loans (B1/B).

Talk on the previously announced term loan B tranche saw the Libor spread widen to 475 bps from 450 bps. The discount was deepened to 98 from previous discount talk of 98.5 to 99.

The B tranche has a 1% Libor floor.

The 101 soft call protection was increased to 12 months from six months.

The deal was modified with the introduction of a $500 million minimum B1 tranche being offered to investors as an alternative. The B1 tranche comes with a 500-bps spread to Libor at 98.

However the B1 tranche has no Libor floor.

In all other respects the B tranche and the B1 tranche are identical, the source said.

The commitment deadline was late Thursday, and the deal is expected to allocate on Friday.

Citigroup, Barclays, RBC, Credit Suisse, Nomura and Macquarie are the joint lead arrangers on the debt.

Along with the term loans, the company is getting a $500 million asset-based revolver.

Proceeds will be used to help fund the buyout of the company by CVC Capital Partners and Canada Pension Plan Investment Board from TPG and Leonard Green & Partners for roughly $4.6 billion.

Matress Firm sets talk

Mattress Firm talked its $730 million incremental first-lien term loan due Oct. 20, 2021 (Ba3/B+) with a 450- to 475-bps spread to Libor and a 1% Libor floor, at an original issue discount of 98.5 to 99.

The loan comes with six months of soft call protection at 101.

Commitments are due at noon ET on Jan. 28.

Additionally, the company is seeking a $200 million amended and extended ABL revolver, the source said.

Barclays is the lead left bookrunner on the deal.

Proceeds will be used to help fund the acquisition of HMK Mattress Holdings LLC, the holding company of Sleepy’s and related entities, for $780 million, subject to working capital and other customary adjustments.

Other funds for the transaction will come from cash on hand.

With the acquisition, pricing on the company’s existing Libor plus 400 bps term loan, which also matures on Oct. 20, 2021, steps to Libor plus 425 bps.

1-800 Contacts flexes

1-800 Contacts (CNT Holdings III Corp.) flexed pricing on its $500 million seven-year first-lien term loan (B1/B).

The Libor spread flexes to 425 bps from previous talk of 450 to 475 bps.

The discount firms at 99, from talk of 98.5 to 99.

The deal retains its 1% Libor floor.

The 101 soft call protection is extended to 12 months from six months.

Commitments were due at Thursday’s close; the book had previously been expected to remain open until Jan. 20.

The company’s $580 million credit facility also includes an $80 million five-year revolver.

Credit Suisse, Barclays and Deutsche Bank are the lead banks on the deal.

Proceeds will be used to help fund AEA Investors LP’s acquisition of a majority interest in the company from Thomas H. Lee Partners LP.

Thomas H. Lee Partners will remain a significant shareholder in the company.

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