Vectra, First Data, PODS free up; Neiman Marcus, Ascena Retail term loans fall some more

By Sara Rosenberg

New York, May 13 – Vectra Co. (Duke Finance LLC) modified the original issue discount on its first-lien term loan and then the debt made its way into the secondary market on Friday, with levels quoted above the revised issue price.

In addition, First Data Corp. finalized sizes on its incremental U.S. and euro term loans and set issue prices at the tight end of guidance, before breaking for trading during the session, and PODS LLC’s add-on term loan hit the secondary as well.

Also in trading, term loans from Neiman Marcus Group LLC and Ascena Retail Group Inc. slid even lower as the retail sector in general continued to feel pressure, especially after J.C. Penney Co. Inc. announced financial results for its fiscal first quarter that showed sales below expectations.

Switching to the primary market, Cengage Learning Inc. and Victory Capital Operating LLC emerged with new loan plans, and Cypress Semiconductor Corp. came out with timing on the launch of its proposed term loan B.

Vectra tweaked, breaks

Vectra changed the original issue discount on its $450 million first-lien term loan due Oct 28, 2021 (Ba3/B) to 90 from 89, a market source said.

As before, pricing on the term loan is Libor plus 600 basis points with a 1% Libor floor, and there is 101 soft call protection through Oct. 28, 2016.

With final terms in place, the loan freed up for trading on Friday, and levels were quoted at 91½ bid, 92½ offered, a trader added.

Credit Suisse Securities (USA) LLC and SMBC are leading the loan that will be used to fund the buyout of the company by Apollo Global Management LLC, which was completed in October 2015.

Vectra, formerly known as OM Group Inc., is a St. Louis-based technology-driven specialty materials and specialty chemicals company.

First Data updated, trades

First Data Corp. firmed its fungible incremental U.S. term loan due July 10, 2022 at $1,008,000,000 and its fungible incremental euro term loan due July 10, 2022 at €311 million, from sizes to be determined on both tranches, and set the original issue discount on the loans at 99.75, the tight end of the 99.5 to 99.75 talk, according to a market source.

The term loans are still priced at Libor/Euribor plus 375 bps with no floor, and all of the July 2022 term loan debt is still getting 101 soft call protection for six months.

After terms finalized, the U.S. term loan made its way into the secondary market, and levels were seen at par bid, 100¼ offered, a trader remarked.

Credit Suisse Securities (USA) LLC and KKR Capital Markets are leading the new debt that will be used to refinance the company’s U.S. term loans due September 2018 and euro term loans due March 2018.

First Data is an Atlanta-based provider of payment processing solutions.

PODS tops OID

PODS’ $170 million add-on first-lien term loan B (B2/B) due February 2022 broke for trading too, with levels quoted at 99½ bid, par offered, a trader said.

Pricing on the add-on term loan B is Libor plus 350 bps with a 1% Libor floor, in line with existing term loan B pricing, and it was sold at an original issue discount of 98.79.

Morgan Stanley Senior Funding Inc., Goldman Sachs & Co. and Barclays are leading the loan that will be used to repay second-lien term loan and revolving credit facility borrowings and for general corporate purposes.

With the add-on, the company is amending its existing credit facility to allow for the one-time prepayment in full of the second-lien term loan, refresh the $60 million “free & clear” incremental loan capacity and revise the incremental first-lien net leverage ratio to 5 times.

Lenders were offered a 25-bps amendment fee.

Closing on the transaction is expected in the week of May 16.

PODS is a Clearwater, Fla.-based provider of storage and moving containers.

Neiman, Ascena down again

In more secondary happenings, Neiman Marcus and Ascena Retail experienced continued softening in their term loans with overall retail sector concerns, which were not helped by J.C. Penney’s morning release of disappointing first quarter results, according to traders.

Neiman, a Dallas-based luxury retailer, saw its term loan quoted by one trader at 91 bid, 92½ offered, down from 92½ bid, 93 offered on Thursday, 93¼ bid, 93¾ offered on Wednesday and 94½ bid, 95¼ on Tuesday. Another trader was quoting the debt at 91 5/8 bid, 92 3/8 offered, and a third trader was quoting the loan at 91½ bid, 92 offered.

And, Ascena, a Mahwah, N.J.-based specialty retailer of clothing, shoes and accessories, saw its term loan quoted by sources in the 95 bid, 96½ offered area, versus 96½ bid, 97½ offered on Thursday and 97 5/8 bid, 98 1/8 offered on Wednesday.

Numbers pressuring retail

The retail sector has been under scrutiny all week as Gap Inc. said net sales for its first quarter declined on a year-over-year basis, Macy’s Inc. reported first quarter results that showed a year-over-year drop in sales as well as net income and lowered full year fiscal 2016 guidance, Nordstrom Inc. disclosed that net earnings for its first quarter fell from the prior year and reduced its full year guidance for net sales and earnings per share, and Kohl’s Corp. released first quarter numbers that included a year-over-year decline in net sales and net income.

Then on Friday, J.C. Penney, a Plano, Texas-based department store chain, reported for the first quarter total net sales below expectations of $2.81 billion, down from $2.86 billion in the first quarter of 2015, and a net loss of $69 million, or $0.22 per share, compared to a net loss of $150 million, or $0.49 per share, in the prior year.

Additionally, J.C. Penney revised its 2016 full year guidance for gross margin to an increase of 10 to 30 bps versus 2015 from previous expectations of an increase of 40 to 60 bps.

Cengage on deck

Moving to the primary market, Cengage Learning set a bank meeting for 2 p.m. ET in New York on Tuesday to launch a new senior secured term loan B, a market source remarked.

Morgan Stanley Senior Funding LLC, Credit Suisse Securities USA LLC, Citigroup Global Markets Inc., BMO Capital Markets Corp., Goldman Sachs & Co., Wells Fargo Securities LLC, Deutsche Bank Securities Inc. and KKR Capital Markets LLC are leading the transaction.

Cengage is a Boston-based educational content, technology and services company for the higher education and K-12, professional, library and workforce training markets.

Victory readies loan

Victory Capital scheduled a bank meeting for 2 p.m. ET on Thursday to launch a fungible $146 million add-on term loan due Oct. 31, 2021 with early talk guided at Libor plus 750 bps with a 1% Libor floor, an original issue discount in the 98 area and 101 soft call protection for one year, according to a market source.

Commitments are due on June 2, the source said.

RBC Capital Markets is leading the loan that will be used to help fund the acquisition of RS Investments from The Guardian Life Insurance Co. of America and the investment professionals and employees of RS.

With the add-on loan, pricing on the existing term loan due Oct. 31, 2021 will be increased from Libor plus 600 bps with a 1% Libor floor to match the add-on pricing, the source added.

Closing on the acquisition is expected by the end of this quarter, subject to regulatory and other customary approvals, conditions and consents.

Victory Capital is a Brooklyn, Ohio-based asset management firm. RS is a San Francisco-based provider of investment management solutions.

Cypress coming soon

Cypress Semiconductor emerged with plans to hold a bank meeting on Monday to launch its previously announced $700 million seven-year term loan B (BB-), a market source remarked.

According to the commitment letter, the loan is expected to be priced at Libor plus 500 basis points with a 1% Libor floor, and include 101 soft call protection for six months.

Bank of America Merrill Lynch is leading the deal that will be used to fund the acquisition of Broadcom Corp.’s Wireless Internet of Things business and related assets in an all-cash transaction valued at $550 million.

Closing is expected in the third quarter, subject to customary conditions and regulatory approvals.

Cypress is a San Jose, Calif.-based manufacturer of mixed-signal integrated circuits.

© 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.