Valeant gains more ground; Atlantic Power, MGM Growth, American Renal update deals

By Sara Rosenberg

New York, April 6 – Valeant Pharmaceuticals International Inc.’s term loans continued to climb higher in trading on Wednesday on the back of amendment proposal changes and an update on restatements and helped by a generally improved market tone.

Switching to the primary market, Atlantic Power LP (APLP Holdings LP) widened pricing and original issue discount on its term loan B while also sweetening the project finance quarterly cash flow sweep, and MGM Growth Properties Operating Partnership LP firmed spread and issue price on its term loan B at the tight end of revised talk.

Also, American Renal Holdings Inc. finalized the original issue discount on its add-on first-lien term loan at the tight side of guidance.

Valeant rises again

Valeant’s term loans were stronger in the secondary market on Wednesday as the overall market felt a little better and positive sentiment from recent company news carried over from Tuesday, according to traders.

The term loans E and F were quoted at 96 bid, 96½ offered, up from 95 5/8 bid, 96 3/8 offered, the term loans C and D were quoted at 96¼ bid, 97 offered, up from 95 5/8 bid, 96 3/8 offered, and the term loan A3 was quoted at 96½ bid, 97½ offered, up from 95½ bid, 97 offered, one trader remarked.

Meanwhile, a second trader had the term loans E and F quoted at 96¼ bid, 97 offered, up from 95¾ bid, 96½ offered on Tuesday.

On Monday, the term loans E and F were quoted at 94 bid, 95 offered, the term loans C and D were quoted at 94¾ bid, 95¾ offered, and the term loan A3 was quoted at 95¼ bid, 96¼ offered.

Valeant amendment

Valeant’s term loan levels began rising on Tuesday as the company went out with changes to its amendment proposal, including the addition of leverage-based pricing grid and requirements for more deleveraging than originally planned.

The company is seeking the amendment to extend the deadline for filing its form 10-K to May 31, to extend the deadline for filing its form 10-Q for the quarter ending March 31 to July 31 and to waive the cross-default to its indentures that arose when the 10-K was not filed on March 15.

Lenders are being offered a 50-bps amendment fee.

Also helping the debt this week was the company’s announcement on Tuesday that the review of various Philidor and related accounting matters has been completed with no further restatements required beyond those previously disclosed.

Valeant is a Laval, Quebec-based specialty pharmaceutical company.

Atlantic Power reworked

Moving to the new deal front, Atlantic Power raised pricing on its $700 million seven-year term loan B to Libor plus 500 basis points from talk of Libor plus 450 bps to 475 bps and moved the original issue discount to 97 from 98, while keeping the 1% Libor floor and 101 soft call protection for one year intact, according to a market source.

Another change made to the loan was to the project finance quarterly cash flow sweep, which is now the greater of 50% and the percentage required to hit quarterly target debt balances that result in an 82% paydown by maturity, which would leave the outstanding balance at $125 million at maturity, versus a 50% sweep previously, the source said.

The company’s $910 million senior secured credit facility (Ba3) also includes a $210 million five-year revolver.

Commitments are due at the close of business on Thursday, the source added.

Atlantic Power leads

Goldman Sachs Lending Partners LLC and Bank of America Merrill Lynch are the joint bookrunners on Atlantic Power’s credit facility and joint lead arrangers with RBC Capital Markets LLC, MUFG and Wells Fargo Securities LLC.

The company will use the new debt to refinance an existing roughly $473 million term loan and $210 million revolver, to redeem C$67.3 million 6.25% convertible debentures due in March 2017 and C$75.8 million 5.6% convertible debentures due in June 2017, to fund other potential initiatives to reshape the company’s capital structure and for general corporate purposes.

Closing is subject to syndication, the conclusion of negotiations, execution of definitive documentation, receipt of requisite approvals and satisfaction of customary conditions.

Atlantic Power is a Dedham, Mass.-based owner and operator of power generation assets.

MGM firms pricing

MGM Growth Properties set the spread on its $1.85 billion seven-year covenant-light term loan B at Libor plus 325 bps, the low end of revised talk of Libor plus 325 bps to 350 bps and down from initial talk of Libor plus 400 bps to 425 bps, and the original issue discount at 99.75, the tight end of revised talk of 99.5 to 99.75 and tight of initial talk of 99, a market source said.

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

The company’s $2.75 billion senior secured credit facility (B1/BB) also includes a $600 million five-year revolver and a $300 million five-year term loan A.

Bank of America Merrill Lynch, J.P. Morgan Securities LLC, Morgan Stanley Senior Funding Inc., Barclays, Citigroup Global Markets Inc. and Deutsche Bank Securities Inc. are leading the deal.

MGM repaying debt

Proceeds from MGM Growth Properties’ credit facility will be used to help repay about $4 billion of debt that the operating partnership is expected to assume from MGM Resorts International and some of its subsidiaries, to help pay around $150 million of fees and expenses associated with the financings and related transactions and for general corporate purposes.

At closing, $150 million is expected to be drawn under the revolver.

The company is also issuing $1.05 billion of senior unsecured notes and using $800 million of equity proceeds for the transaction.

MGM Growth Properties is a Las Vegas-based real estate investment trust that is being spun off from MGM Resorts, a Las Vegas-based operator of resorts and casinos.

American Renal sets OID

American Renal finalized the original issue discount on its $60 million add-on first-lien term loan at 99.5, the tight end of the 99 to 99.5 talk, a market source remarked.

Pricing on the loan is Libor plus 350 bps with a 1.25% Libor floor, and the debt has 101 soft call protection for six months.

In connection with the add-on, pricing on the company’s existing first-lien term loan is increasing to Libor plus 350 bps with a 1.25% Libor floor from Libor plus 325 bps with a 1.25% Libor floor.

Bank of America Merrill Lynch, Wells Fargo Securities LLC, SunTrust Robinson Humphrey Inc., Barclays and Goldman Sachs Bank USA are leading the add-on term loan that will be used with proceeds from a proposed initial public offering of common stock to refinance in full a second-lien term loan.

American Renal is a Beverly, Mass.-based provider of dialysis services.

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