Alkermes first- and second-lien loans break; Pro Mach fills out; Ashland allocating soon

By Sara Rosenberg

New York, July 1 - Alkermes Inc.'s first- and second-lien term loans made their way into the secondary market during Friday's quiet pre-holiday weekend session, with both term loans quoted above their original issue discount prices.

Over in the primary, Pro Mach Inc.'s credit facility has received a strong amount of interest, resulting in oversubscription of the transaction at the wide end of talk, and Ashland Inc. is getting ready to give out allocations on its well met deal in the next few days.

Alkermes frees up

Alkermes' term loans began trading on Friday, with the $310 million six-year first-lien term loan B (BB) quoted at par ¼ bid, par ¾ offered and the $140 million seven-year second-lien term loan C (B) quoted at 101 bid, 102 offered, according to a trader.

Pricing on the term loan B is Libor plus 525 basis points, and pricing on the term loan C is Libor plus 800 bps. Both tranches have a 1.5% Libor floor. The term loan B was sold at an original issue discount of 99 and includes 101 soft call protection for one year, and the term loan C was sold at discount of 98 and provides for call protection of 103 in year one, 102 in year two and 101 in year three.

During syndication, pricing on the term loan B was increased from talk of Libor plus 425 bps to 450 bps and pricing on the term loan C was flexed up from talk of Libor plus 725 bps to 750 bps.

Alkermes ticking fees

Alkermes' first- and second-lien senior secured covenant-light term loans include a ticking fee of 75 bps from allocation through July 31, then half the funded spread from Aug. 1 through Sept. 30 and the full spread thereafter.

Morgan Stanley & Co. Inc. and HSBC Securities (USA) Inc. are the lead banks on the deal that will be used to help fund the company's merger with Elan Drug Technologies to create Alkermes plc in a cash and stock transaction valued at about $960 million.

Under the agreement, Elan Corp. plc will receive $500 million in cash and 31.9 million ordinary shares of Alkermes plc common stock. Also, existing shareholders of Alkermes Inc. will receive one ordinary share of Alkermes plc in exchange for each share of Alkermes Inc. they own at the time of the merger.

Alkermes leverage multiple

Pro forma for the transaction, Alkermes' debt to EBITDA will be 4.6 times and net debt to adjusted EBITDA will be 2.5 times.

Closing on the merger is expected to take place in September, subject to approval by Alkermes' stockholders and regulatory approvals, including antitrust approvals in the United States.

Alkermes plc will have headquarters in Dublin, Ireland. Alkermes Inc. is a Waltham, Mass.-based biotechnology company. Elan Drug Technologies is an Ireland-based drug delivery business.

Pro Mach fills out

Moving to the primary, Pro Mach's $255 million senior secured credit facility (B2/B+) is "well oversubscribed" at the high end of talk, a market source told Prospect News, adding that allocations are targeted to go out early in the July 4 week.

The facility consists of a $35 million five-year revolver and a $220 million six-year term loan B that were launched with talk of Libor plus 450 bps to 475 bps.

The term loan B has a 1.5% Libor floor is being offered at an original issue discount of 99 and includes 101 soft call protection for one year. The revolver has no floor.

Barclays Capital Inc. is the lead bank on the deal for which commitments had been due this past Thursday.

Pro Mach being acquired

Proceeds from Pro Mach's credit facility will be used to help fund the buyout of the company by the Resolute Fund II LP, an affiliate of the Jordan Co., from Odyssey Investment Partners LLC.

Closing is expected to occur on July 5, subject to customary conditions, including the repayment of substantially all outstanding Pro Mach debt.

Leverage is 4.5 times senior secured and 4.4 times net total.

Pro Mach is a Cincinnati-based provider of packaging machinery services and related aftermarket products to clients in the food, beverage, household goods and pharmaceutical industries.

Ashland readies allocations

Ashland, a Covington, Ky.-based provider of specialty chemical products and services, is planning on allocating its $3.65 billion credit facility (BB) during the week of July 4, according to a market source.

As was previously reported, the deal is well oversubscribed and has seen strong interest early on as nine banks signed on to the transaction during the early senior managing agent round.

Banks that signed on as senior managing agents took some revolver and term loan A commitments and were offered some term loan B as well.

Specifically, the facility consists of a $750 million five-year revolver and a $1.2 billion five-year term A, both being talked at Libor plus 225 bps, and a $1.7 billion seven-year term B talked at Libor plus 300 bps with a 1% Libor floor and an original issue discount of 991/2.

Ashland buying ISP

Proceeds from Ashland's credit facility, along with cash on hand, will be used to fund the acquisition of International Specialty Products Inc., a Wayne, N.J.-based specialty chemical manufacturer of functional ingredients and technologies, for $3.2 billion in cash.

Citigroup Global Markets Inc., Scotia Capital (USA) Inc., Bank of America Merrill Lynch and U.S. Bank are the joint lead arrangers and bookrunners on the deal.

Pro forma for the transaction, secured debt to adjusted EBITDA is 3.2 times, secured net debt to adjusted EBITDA is 2.7 times, total debt to adjusted EBITDA is 3.5 times, and total net debt to adjusted EBITDA is 2.9 times.

Closing is expected prior to the end of the September quarter, subject to satisfaction of customary conditions and receipt of U.S. and E.U. regulatory approvals.

Alere closes

In other news, Alere Inc. completed its $2.1 billion senior secured credit facility (Ba2/BB-), according to a news release, consisting of a $250 million revolver, a $625 million term loan A and a $300 million delayed-draw term loan A, all priced at Libor plus 275 bps with no Libor floor, and a $925 million term loan B priced at Libor plus 350 bps with a 1% Libor floor that was sold at a discount of 991/2.

All tranches have a leverage-based pricing grid under which pricing increases by 25 bps when senior secured leverage is greater than 3.0 times and by an additional 50 bps when senior secured leverage is greater than 4.0 times.

Jefferies & Co., GE Capital Markets, Credit Suisse Securities (USA) LLC and Goldman Sachs & Co. are the lead banks on Alere's credit facility.

Alere funding recap

Proceeds from Alere's credit facility were used to refinance existing debt, to fund the buyback of common stock and to add cash to the balance sheet.

During syndication, the B loan was reduced to $750 million from $1 billion, then lifted to $875 million before ending up at the final amount. Also, pricing had been flexed up from talk of Libor plus 300 bps to 325 bps, and a $300 million delayed-draw term loan B was eliminated.

Meanwhile, the A loan was upsized to $700 million from $450 million before ending up at its final amount, the delayed-draw term A was upsized from $100 million, and pricing on the revolver and the A loans was increased from Libor plus 250 bps.

Alere is a Waltham, Mass.-based provider of near-patient diagnosis, monitoring and health management to enable individuals to improve their health and quality of life at home.

AMC wraps spinoff

AMC Networks Inc. (Rainbow Media Holdings LLC) completed its spinoff from Cablevision Systems Corp., which was funded in part by a new $2.225 billion senior secured credit facility (Ba2/BB+).

The facility consists of a $1.13 billion six-year term loan A and a $500 million five-year revolver, both priced at Libor plus 200 bps, with the revolver having a 37.5 bps unused fee, and a $595 million 71/2-year term loan B priced at Libor plus 300 bps with a 1% Libor floor that was sold at a discount of 991/2.

During syndication, the B loan was upsized from $565 million while the A loan was cut from $1.16 billion, and pricing on the term B firmed at the wide end of talk of Libor plus 275 bps to 300 bps.

J.P. Morgan Securities LLC and Bank of America Merrill Lynch led the deal.

AMC's assets include programming networks AMC, WE tv, IFC, Sundance Channel and Wedding Central, IFC Entertainment, an independent film business, and Rainbow Network Communications, a network programming origination and distribution company.

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