PQ, SiteOne price deals; American Airlines upsizes; supply shortage driving hot loan market

By Paul A. Harris

Portland, Ore., April 27 – Bank loans continued to be well-bid on Wednesday, according to a trader on the East Coast.

“There’s nothing for sale,” said the trader, adding that the shortage of new issue supply is driving hot market conditions in which deals are upsizing, spreads are tightening and timing is being accelerated.

“It’s the same every year,” the trader said, adding that new banking regulations are exacerbating the situation this time around.

The new NBTY Inc. Libor plus 400 basis points covenant-light term loan (B1/B+) was up a quarter of a point on the day at 100¼ bid, 100¾ offered, after having been bid as high as 100½ earlier in the day, the trader said.

The $1.33 billion tranche priced at 99.5 on Tuesday, and broke to 100 3/8 bid, the trader recounted.

Elsewhere in the secondary market the loan paper of drugs tester Millennium Laboratories fell precipitously following a company call, said the trader who was awaiting an explanation.

In 10 minutes the loan paper fell to 76 bid, 81 offered, down from the mid-90s, source said.

The cash flows of the dedicated bank loan funds were mixed on Tuesday, the most recent session for which data was unavailable at press time, a source said.

The funds saw $10 million of aggregate outflows on the day. However, bank loan ETFs were actually positive on Tuesday, seeing $2 million of inflows on the day.

The bank loan funds are tracking $45 million of outflows week-to-date, the source said.

In the primary market PQ Corp. and SiteOne Landscape Supply priced deals, while American Airlines Group Inc. upsized its deal and trimmed the discount.

PQ prices term loan

PQ priced its $900 million senior secured covenant-light term loan (B2/B+) with a 475 bps spread to Libor at 99.00.

The deal broke to 100 3/8 bid, 100 7/8 offered, a market source said.

The spread floats atop a 1% Libor floor.

The spread and price came atop final price talk. Spread talk was revised from 500 bps, which was itself a revision from still earlier talk of 550 bps.

The discount came atop final price talk, which had been revised from earlier talk of 97.5 to 98.

The 101 soft call protection from repricing, which was cut earlier in the week to six months from a year, remains unchanged in the final terms.

The $1.2 billion equivalent package also includes $300 million equivalent of euro-denominated paper pricing at the same levels and set to allocate Thursday.

Citigroup, Credit Suisse, Morgan Stanley, J.P. Morgan, Jefferies, Goldman Sachs, Deutsche Bank and Keybanc are the joint lead arrangers on the deal, with Citigroup the left lead and Credit Suisse the administrative agent.

The term loan has a springing maturity six months inside the existing notes at Eco Services Operations LLC if the notes have not been refinanced.

Proceeds will be used to refinance credit facilities at PQ and Eco Services and PQ’s second-lien notes concurrent with the merger of the two companies.

SiteOne prices term loan

SiteOne Landscape Supply priced its $250 million Libor plus 550 bps six-year first-lien term loan at 99.00.

The spread came 50 bps below the 600-bps spread talk. The reoffer price shaved off one point of OID from discount talk of 98.

The spread floats atop a 1% Libor floor.

The term loan has 101 soft call protection for six months

The spread steps to 525 bps following a qualified IPO.

UBS is the bookrunner on the deal.

Proceeds will be used to refinance existing debt and to fund a dividend.

American upsizes, tightens

American Airlines upsized its seven-year term loan B (Ba1/BB+) to $1 billion from $750 million, a market source said on Wednesday.

In addition to the upsizing, price talk richened to 99.25 from 99.

Commitments were due on Wednesday.

Unchanged were the 275-bps spread to Libor, the 0.75% Libor floor and the six-month 101 soft call protection.

Barclays, Bank of America Merrill Lynch, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman Sachs Bank USA, J.P. Morgan Securities LLC, Morgan Stanley Senior Funding Inc., BNP Paribas Securities Corp., Credit Agricole, ICBC and U.S. Bank NA are the bookrunners on the deal.

Covenants include minimum unrestricted liquidity of $2 billion and a minimum collateral coverage ratio of 1.6 times.

Proceeds will be used to repay the company’s $588 million term loan B-2 due in 2016, to pay related fees and expenses and for general corporate purposes.

Net debt to EBITDAR is 2.4 times, the source added.

American Airlines is a Fort Worth-based airline company.

KinderCare upsizes

KinderCare Education, LLC upsized a tack-on to its first-lien term loan due Aug. 13, 2022 (B1/B) to $50 million from $25 million, a market source said on Wednesday.

Talk remains at a 500-bps spread to Libor, with a step-down, at 98.5.

Commitments were due at the Wednesday New York close.

Credit Suisse Securities (USA) LLC is the arranger.

The spread will float atop a 1% Libor floor.

The spread to Libor is the same as that of the existing $642 million loan, as is the 101 soft call through August 2016.

Proceeds will be used to fund the early buyout of leases on closed properties.

KinderCare, formerly known as Knowledge Universe, is a for-profit Portland, Ore.-based provider of early childhood education in the United States and the parent company of KinderCare Learning Centers, as well as the brands Children’s Creative Learning Centers and Champions.

Pabst sets Thursday call

Pabst Brewing Co. set a lender call for 11 a.m. ET on Thursday for a $135 million incremental term loan due Nov. 13, 2021, according to a market source.

UBS is the left lead for the deal, which will be fungible with the existing term loan.

The incremental loan features a 1% Libor floor.

There will also be certain amendments to the credit agreement.

The issuing entity will be Blue Ribbon, LLC, the parent of the Los Angeles-based brewing company.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.