Olympia upsizes B loan, cuts spread; Quintiles sets talks; Serena breaks; Movie Gallery regains ground

By Sara Rosenberg

New York, March 8 - On the primary side of things Wednesday, Olympia Group increased the size of its term loan B and cut pricing on the tranche being that it was well received by the market. And, Quintiles Transnational Corp. came out with price talk on its credit facility as the deal was launched into syndication via a bank meeting.

In secondary happenings, Serena Software Inc. freed for trading with the term loan B paper being quoted in the upper-101 context. Also, Movie Gallery Inc.'s term loan headed to slightly stronger levels on Wednesday to recoup a bit of the losses that the paper has felt since news of its amendment calls hit the market.

Olympia Group tweaked its credit facility structure, upsizing the term loan B tranche while at the same time reverse flexing pricing on the paper, according to a market source.

The five-year term loan B (B1/BB) is now sized at $280 million, up from an original size of $255 million, and pricing came down to Libor plus 275 basis points from original price talk at launch of Libor plus 300 basis points, the source said.

The $50 million three-year revolver (B1/BB) and the $80 million six-year second-lien term loan (B2/B+) were said to be left unchanged in terms of size, meaning that the overall deal was increased to a total size of $410 million from $385 million.

Furthermore, second-lien term loan pricing of Libor plus 700 basis points was also said to be left unchanged.

Credit Suisse is the lead arranger on the deal that will be used for real estate development.

Olympia Group is an investment management group.

Quintiles price talk

Quintiles released opening spreads on its credit facility as the deal was presented to lenders through a Wednesday bank meeting that was said to have gone very well, according to a market source.

The $250 million revolver due in 2012 (B1/BB-) and the $900 million first-lien term loan B due in 2013 (B1/BB-) were both launched with opening price talk of Libor plus 225 basis points, and the $320 million second-lien term loan C due in 2014 (B3/B) was launched with opening price talk of Libor plus 450 basis points, the source said.

Citigroup, JPMorgan and Morgan Stanley are joint bookrunners on the deal, and Citigroup and JPMorgan are joint lead arrangers, with Citigroup also acting as administrative agent, and JPMorgan and Morgan Stanley acting as co-syndication agents.

Proceeds from the $1.47 billion credit facility will be used, along with cash on hand, to fund the tender offer for Quintiles' $450 million 10% senior subordinated notes due 2013 and Pharma Services Intermediate Holding Corp.'s $219 million 11.5% senior discount notes due 2014.

Quintiles is a Durham, N.C., pharmaceutical services company.

Aearo sets opening spreads

Price talk on Aearo Technologies Inc.'s credit facility emerged now that syndication is officially in the works, with the $60 million revolver (B2/B) and $340 million first-lien term loan (B2/B) talked at Libor plus 250 basis points, and the $170 million second-lien term loan (Caa1/CCC+) talked at Libor plus 650 basis points, according to a market source.

Bank of America, Goldman Sachs and Bear Stearns are the lead banks on the $570 million deal, with Bank of America the left lead.

As of about mid-last week, the transaction was heard to be almost fully subscribed even though the official launch didn't actually take place until this past Tuesday.

Proceeds from the credit facility will be used to help fund Permira's leveraged buyout of the company.

Under the acquisition agreement, Permira will purchase Aearo Technologies for about $765 million from Bear Stearns Merchant Banking and other investors.

The transaction is subject to financing, regulatory approvals and other customary closing conditions.

Aearo Technologies is an Indianapolis-based personal protection equipment company.

MEG overfills

MEG Energy Corp.'s institutional bank debt has already reached the point of oversubscription as investors were apparently happy to throw in commitments for a strip of funded and delayed-draw term loan B debt, according to a market source.

The $700 million seven-year term loan B - $350 million of which is funded and $350 million of which is delayed draw for two years - is currently talked at Libor plus 225 basis points. The ticking fee on the delayed-draw portion is initially 75 basis points with step ups over time.

Some sources had been keeping an eye on this deal as the presence of the relatively large delayed-draw tranche raised some questions about whether it was possible for the company to get as large of an audience since delayed draws make it tough for CLOs to get involved.

In addition, sources have said that although it's hard to price that high a percentage of delayed draw at an attractive blended rate, the feel for oil sands collateral value is very high, making this deal, and in particular, the delayed draw, one to watch.

MEG Energy's $750 million credit facility (Ba3/BB) also contains $350 million of funded seven-year term loan B debt talked at Libor plus 225 basis points and a $50 million three-year revolver talked at Libor plus 225 basis points with a 50 basis point undrawn fee.

Lehman and Credit Suisse are the lead banks on the credit facility, with Lehman the left lead.

Proceeds will be used to develop a SAGD (Steam Assisted Gravity Drainage) project. SAGD involves drilling pairs of horizontal wells. The upper wells are the steam injection wells and the lower wells are equipped as the bitumen production wells. Steam is continuously injected through the upper well bores to create steam chambers, which heat the formation. The heated bitumen, under the influence of gravity, then drains to the lower horizontal wells and is produced to the surface.

MEG Energy is an oil and gas company involved in oil sands development in northeast Alberta, Canada.

Serena tops 101

Switching to the secondary, Serena Software allocated its new credit facility on Wednesday, with the $400 million seven-year term loan B quoted at 101½ bid, 101¾ offered on its first day of trading, according to sources.

The term loan B is priced with an interest rate of Libor plus 225 basis points with a step down to Libor plus 200 basis points once leverage is less than 5.5x. During syndication, the term loan was upsized from $375 million as the company downsized its bond deal by $25 million to $200 million, and pricing on the term loan debt was reverse flexed from Libor plus 250 basis points with the addition of the step down.

Serena's $475 million credit facility (B1/B) also contains a $75 million six-year revolver with an initial interest rate of Libor plus 250 basis points. The revolver contains a pricing grid that allows for rates to range anywhere from Libor plus 175 basis points to Libor plus 250 basis points.

Lehman Brothers, Merrill Lynch and UBS Securities are the joint lead arrangers on the credit facility, with Lehman acting as administrative agent.

Proceeds from Serena's now along with bond proceeds, will be used to help fund Silver Lake Partners' leveraged buyout of the company.

Under the LBO agreement, Silver Lake Partners has agreed to acquire Serena for about $1.2 billion. Serena stockholders will receive $24 in cash in exchange for each share of stock. Any of Serena's existing $220 million of convertible notes that are not converted to Serena common stock prior to completion of the proposed transaction will be exchanged for cash in an amount of $24 for each share of Serena common stock.

Closing on the credit facility is scheduled for the end of this week.

Serena is a San Mateo, Calif., provider of software products for managing process and controlling change across the information technology environment.

Movie Gallery inches up

Movie Gallery's term loan closed the session slightly stronger on a day-over-day basis, despite the lack of good news on the company's stock and bond side, possibly on the belief by loan investors that rates and fees will bounce up in connection with the latest amendment request, according to a trader.

The term loan closed the day quoted at 91¼ bid, 92 offered, the trader said. On Tuesday, the bank debt had dropped as low as 89½ bid, 90½ offered in the wake of the company's amendment calls but then recouped somewhat to the 91 bid, 91¾ offered context before the day was through. Prior to the lender call taking place, the term loan was quoted in the 92 bid, 93 offered region.

The company's stock closed at $2.47, down $0.64, or 20.58%, on the day and the company's bonds were being quoted at 56½ bid, 57½ offered, down a couple of points on the day from previous levels of around 60.

Movie Gallery held lender calls on Monday afternoon - first for public lenders and then for private lenders - to discuss the overall business environment and the amendment of financial covenants. The company is not currently in default under its covenants but looking forward relief will be needed.

During these calls there was talk of an amendment fee and an increase in pricing on all tranches, sources have previously told Prospect News.

Movie Gallery is a Dothan, Ala.-based operator of video retail stores.

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