Laureate Education gains on asset sale; Alere retreats; NBTY revises deadline on term loans

By Sara Rosenberg

New York, April 20 – Laureate Education Inc.’s term loan B rose in the secondary market on Wednesday by a few points on the back of news that the company has reached an agreement to sell Laureate International Universities France SAS, and Alere Inc.’s term loan B weakened with some uncertainty over its pending acquisition by Abbott Laboratories.

Moving to the primary market, NBTY Inc. accelerated the commitment deadline on its U.S. dollar and sterling term loan debt.

Laureate rallies

Laureate Education’s term loan B was noticeably stronger in trading on Wednesday as investors are expecting some sort of deleveraging event to occur in connection with the company’s sale of Laureate International Universities France to Apax Partners and Bpifrance, a trader said.

The sale, which was announced late Tuesday, is expected to close before the end of June, subject to approval by the French anti-trust authority.

On Wednesday, Laureate’s term loan B was quoted at 95¼ bid, 96¼ offered in the morning, up from 91½ bid, 92½ offered in the previous session, the trader remarked.

Then, by mid-afternoon, the loan had settled in a bit at 94¾ bid, 95 ¾ offered, the trader added.

Laureate is a Baltimore-based network of degree-granting higher education institutions.

Alere softens

Alere’s term loan B moved lower in the secondary market after management at Abbott Laboratories declined to reaffirm the company’s commitment to buying Alere, according to a market source.

The source said that there were buyers in Alere’s term loan B in the 99 3/8 and 99½ contexts during the day, versus levels of par bid on Tuesday. By late day, when looking at quotes from various traders, the highest level the source was seeing on the term loan B was 99½ bid, par offered, and the lowest level he was seeing was 99 3/8 bid, 99 7/8 offered.

In the morning, Abbott held its first quarter earnings conference call, at which time the question was asked as to whether the company is reaffirming its commitment to buying Alere.

In response, Abbott management pointed out that Alere had delays filing their 10-K, and it is unknown as to when Alere’s proxy will be filed. Also unknown is when Alere’s shareholder vote will take place.

“So right now, I’d say it’s not appropriate for me to comment on Alere,” management added in the call.

Alere acquisition details

In February, Abbott announced plans to buy Alere for $56 per common share at a total expected equity value of $5.8 billion.

As part of the transaction, Alere’s net debt would be assumed or refinanced by Abbott.

Closing on the acquisition is subject to the approval of Alere shareholders and the satisfaction of customary conditions, including applicable regulatory approvals.

Since the acquisition was announced, Alere has been facing some issues and in late March revealed that it failed to timely file its annual report on form 10-K for the fiscal year ended Dec. 31, 2015.

The reason for the filing delay is that Alere is conducting an analysis of certain aspects of the timing of revenue recognition, more specifically, revenue cutoff, in Africa and China for the years ended Dec. 31, 2013, 2014 and 2015.

Alere is a Waltham, Mass.-based provider of near-patient diagnosis, monitoring and health management. Abbott is an Abbott Park, Ill.-based healthcare company.

NBTY shutting early

Switching to the primary market, NBTY accelerated the commitment deadline on its $1.4 billion covenant-light term loan B (B1/B+) to Friday from April 27 and on its £300 million covenant-light term loan B (B1/B+) to Monday from April 27, according to a market source.

The U.S. term loan is talked at Libor plus 425 basis points to 450 bps and the sterling term loan is talked at Libor plus 525 bps to 550 bps. Also, both loans are guided with a 1% Libor floor, an original issue discount of 98.5 to 99 and 101 soft call protection for six months.

Bank of America Merrill Lynch, Barclays, Credit Suisse Securities (USA) LLC, Morgan Stanley Senior Funding Inc., UBS AG, Jefferies Finance LLC and Mizuho are the lead banks on the senior secured deal.

NBTY refinancing

Proceeds from NBTY’s term loans will be used to help fund the redemption of all of the outstanding 7.75%/8.5% contingent cash pay senior notes due 2017 issued by NBTY’s parent company, Alphabet Holding Co. Inc., to redeem all of NBTY’s 9% senior notes due 2018 and to repay all outstanding borrowings under NBTY’s existing senior secured credit facilities.

Other funds for the refinancing are expected to come from borrowings under a new $400 million asset-based credit facility, $1,075,000,000 of senior notes and cash on hand.

NBTY is a Ronkonkoma, N.Y.-based manufacturer, marketer, distributor and retailer of vitamins and nutritional supplements.

NAPA closes

In other news, the buyout of NAPA Management Services Corp. (NMSC Holdings Inc.) by American Securities LLC has been completed, a news release said.

To help fund the transaction, NAPA got a new $380 million credit facility (B1/B) that includes a $40 million revolver (B1/B) and a $340 million seven-year covenant-light term loan B.

Pricing on the term loan B is Libor plus 500 bps with a 1% Libor floor, and it was sold at an original issue discount of 99. The loan has 101 soft call protection for one year and 50 bps MFN for life.

During syndication, the B loan was upsized from $320 million, the spread was reduced from talk of Libor plus 525 bps to 550 bps, the discount tightened from 98, and the call protection was extended from six months.

As a result of the term loan B upsizing, the company reduced the equity for the buyout by $10 million and a privately placed second-lien term loan by $10 million to $150 million from $160 million.

Deutsche Bank Securities Inc., Credit Suisse Securities (USA) LLC, RBC Capital Markets LLC and BMO Capital Markets Corp. led the revolver and term B. Ares Capital Corp. and Crescent Mezzanine served as second-lien arrangers.

NAPA is a Melville, N.Y.-based outsourced anesthesia and perioperative management services company.

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