Windstream breaks; Neiman up with earnings; Valeant falls on numbers, guidance changes

By Sara Rosenberg

New York, March 15 – Windstream Services LLC upsized its term loan B-6, trimmed the spread and finalized the original issue discount guidance at the midpoint of talk, and then the debt made its way into the secondary market.

Also in trading, Neiman Marcus Group LLC’s term loan moved up by a couple of points after the company released fiscal second quarter numbers, and Valeant Pharmaceuticals International Inc.’s term loans softened as preliminary unaudited fourth quarter results were announced and guidance for 2016 was lowered.

Back in the primary market, Western Digital Corp., Blount International Inc., API Technologies Corp. and DYK Automotive/AAHC disclosed price talk with launch.

Windstream revised, trades

Windstream raised its incremental five-year term loan B-6 to $600 million from $400 million, cut pricing to Libor plus 500 basis points from Libor plus 525 bps, set the original issue discount at 97.5, the middle of the 97 to 98 talk, and removed the MFN sunset, according to a market source.

As before, the loan has a 0.75% Libor floor and 101 soft call protection for six months.

Once final terms were in place, the B-6 loan freed up for trading and levels were quoted at 98 bid, 98½ offered, a trader said.

Morgan Stanley Senior Funding Inc. is leading the deal that will be used to fund a tender offer that expires on April 11 for the company’s existing 7 7/8% senior notes due 2017 and, with the funds from the upsizing, pay down debt, the source said.

Windstream is a Little Rock, Ark.-based provider of network communications and technology solutions.

Neiman Marcus rallies

In more trading news, Neiman Marcus’ term loan jumped to 93¾ bid, 94¼ offered early on in the day after the company came out with results for its fiscal second quarter ended Jan. 30, and then, by late afternoon, levels came back in a bit to 93 bid, 93¾ offered, according to a trader.

The loan still ended up by quite a bit on a day-over-day basis from quotes of 88½ bid, 89½ offered on Monday, the trader said.

For the quarter, the company reported net earnings of $7.9 million, versus net earnings of $27.8 million in the comparable period in the previous year.

Total revenues were $1.49 billion, compared to total revenues of $1.52 billion for the second quarter of fiscal year 2015.

And, adjusted EBITDA for the quarter was $183 million, compared to $205.9 million in the prior year.

Neiman Marcus is a Dallas-based luxury retailer.

Valeant loans retreat

Valeant Pharmaceuticals’ term loans weakened in the secondary market in connection with preliminary fourth quarter numbers coming out and guidance revisions, a trader remarked.

The term loan E was quoted at 92 bid, 92¾ offered, down from 94½ bid, 95 offered, the term loan F was quoted at 92¼ bid, 93 offered, down from 94 5/8 bid, 95 1/8 offered, and the C and D term loans were quoted at 92½ bid, 93½ offered, down from 95 bid, 95¾ offered, the trader said.

For the fourth quarter, the company outlined preliminary unaudited revenue of $2.8 billion, unaudited GAAP loss per share of $0.98, non-GAAP adjusted earnings per share of $2.50, unaudited GAAP cash flow from operations of $562 million and non-GAAP adjusted cash flow from operations of $838 million.

Preliminary unaudited fourth quarter results were impacted by softer-than-expected sales of the gastrointestinal business, as compared to previous guidance issued in December, the company said in a news release.

As previously reported, Valeant has delayed filing its 10-K for 2015 as a result of ongoing work to review its relationship with Philidor and related matters, and to assess the impact on financial reporting and internal controls.

Valeant cuts guidance

Along with disclosing unaudited fourth quarter numbers, Valeant updated its first quarter 2016 total revenue guidance to a range of $2.3 billion to $2.4 billion from prior guidance of $2.8 billion to $3.1 billion, and adjusted earnings per share guidance for the quarter was revised to $1.30 to $1.55 from $2.35 to $2.55 previously.

First quarter 2016 results have been impacted by continued inventory destocking in dermatology and GI, revenue shortfalls in several businesses, and little to no corresponding cost reductions to compensate. In addition, management transition issues and continued organizational distractions are expected to negatively impact operations during the quarter, the news release said.

The Laval, Quebec-based specialty pharmaceutical company also modified full-year 2016 forecasts, with total revenue estimated at $11 billion to $11.2 billion, compared to prior estimates of $12.5 billion to $12.7 billion.

Additionally, non-GAAP adjusted earnings per share guidance for the year was changed to $9.50 to $10.50 from previous guidance of $13.25 to $13.75, and non-GAAP adjusted EBITDA guidance for 2016 was lowered to be $5.6 billion to $5.8 billion from a prior range of $6.9 billion to $7.1 billion.

Western Digital sets talk

Switching back to the primary market, Western Digital had its New York bank meeting on Tuesday afternoon, and revealed talk on its $4.2 billion seven-year covenant-light term loan B and $550 million equivalent euro-denominated seven-year covenant-light term loan B as Libor/Euribor plus 450 bps to 475 bps with a 0.75% floor, an original issue discount of 98.5 and 101 soft call protection for one year, a market source remarked.

A bank meeting for European investors will take placed in London on Wednesday.

The company’s $9.5 billion credit facility (Ba1/BBB-/BBB-) also includes a $1 billion five-year revolver and a $3.75 billion five-year term loan A, both talked at Libor plus 200 bps, the source said.

Commitments are due in two weeks.

J.P. Morgan Securities LLC, Bank of America Merrill Lynch, Credit Suisse Securities (USA) LLC and RBC Capital Markets LLC are leading the deal.

Western Digital buying SanDisk

Proceeds from Western Digital’s credit facility will be used with stock and secured and unsecured notes to fund the acquisition of SanDisk Corp. and refinance existing debt at both companies.

SanDisk is being bought for $78.80 per share for a total equity value of about $17 billion. Assuming no closing cash shortfall, Western Digital will pay $67.50 in cash and 0.2387 of a share of Western Digital common stock per share of SanDisk common stock.

Closing is expected in the second quarter, subject to regulatory approval in China and other customary conditions.

Western Digital is an Irvine, Calif.-based developer and manufacturer of storage solutions that enable people to create, manage, experience and preserve digital content. SanDisk is a Milpitas, Calif.-based provider of flash storage solutions.

Blount guidance surfaces

Blount International held its New York bank meeting in the morning, and with the event, talk on its $300 million seven-year first-lien term loan and $175 million equivalent euro-denominated seven-year first-lien term loan emerged at Libor/Euribor plus 600 bps with a 1% floor, an original issue discount of 98 and 101 soft call protection for one year, according to a market source.

A bank meeting for European investors will take place in London on Wednesday.

The company’s $550 million senior secured credit facility (B1/B+) also includes a $75 million five-year revolver.

Commitments are due at noon ET on March 30.

Barclays, KeyBanc Capital Markets Inc. and ING Capital are leading the deal.

Blount being acquired

Proceeds from Blount’s credit facility will be used with $475 million in equity to fund its buyout by American Securities LLC and P2 Capital Partners LLC for $10.00 in cash per share. The transaction is valued at about $855 million, including the assumption of debt.

Closing is expected in the first half of this year, subject to approvals by Blount’s shareholders and regulatory authorities, and customary conditions.

Total leverage is 4.4 times, and net total leverage is 4 times.

Blount is a Portland, Ore.-based manufacturer and marketer of replacement parts, equipment and accessories for consumers and professionals operating in three market segments: forestry, lawn and garden; farm, ranch and agriculture; and concrete cutting and finishing.

API Technologies launches

API Technologies came out with talk of Libor plus 600 bps with a 1% Libor floor, an original issue discount of 98 and 101 soft call protection for six months on its $115 million term loan that launched with an afternoon bank meeting, a source remarked.

The company’s $145 million credit facility also includes a $30 million revolver.

Commitments are due on April 1, the source added.

BNP Paribas Securities Corp. is leading the deal that will be used to help fund the buyout of the company by J. F. Lehman & Co. for $2.00 per share in cash.

Other funds for the transaction are expected to come from a subordinated debt commitment from Babson Capital Management LLC and equity, according to filings with the Securities and Exchange Commission.

Closing is expected in the company’s 2016 second fiscal quarter, subject to the expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and other conditions.

API is an Orlando, Fla.-based provider of high performance RF, microwave, millimeterwave, power and security solutions.

DYK terms emerge

DYK Automotive/AAHC held a bank meeting in the morning, launching a $134 million term loan with talk of Libor plus 550 bps with a 1% Libor floor, an original issue discount of 98 to 98.5 and 101 soft call protection for six months, according to a market source.

The company’s $164 million credit facility also includes a $30 million revolver.

Commitments are due on March 28, the source said.

BNP Paribas Securities Corp. is leading the deal that will be used to help fund the buyout of the company by The Sterling Group.

DYK Automotive is an automotive aftermarket distributor.

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