Albertsons, AMC Entertainment, US Farathane free to trade; Men’s Wearhouse under pressure

By Sara Rosenberg

New York, Dec. 10 – Albertsons Cos. LLC and AMC Entertainment Inc. firmed original issue discounts on their term loan Bs and then broke for trading on Thursday.

Also, US Farathane Corp.’s add-on term loan hit the secondary market, and Men’s Wearhouse Inc.’s term loan dropped on the back of disappointing earnings results.

Albertsons sets terms, breaks

Albertsons firmed the original issue discount on its $1,145,000,000 seven-year senior secured covenant-light term loan B-5 (Ba3/BB) at 99, the wide end of the 99 to 99.5 talk, according to a market source.

As before, the loan is priced at Libor plus 450 basis points with a 1% Libor floor and has 101 soft call protection for six months.

Once terms were set, the debt was able to make its way into the secondary market on Thursday, and levels were quoted at 99 1/8 bid, 99 5/8 offered, a trader remarked.

Citigroup Global Markets Inc., Bank of America Merrill Lynch and Credit Suisse Securities (USA) LLC are the joint lead arrangers on the deal, with Credit Suisse the administrative agent.

Closing is expected on Dec. 17.

Proceeds will be used by the Boise, Idaho-based food and drug retailer to refinance an existing term loan at New Albertson’s Inc.

AMC firms OID, trades

AMC Entertainment finalized the original issue discount on its $881 million seven-year senior secured term loan B (Ba1/BB/BB+) at 99.5, the tight end of the 99 to 99.5 talk, a market source said.

The loan is still priced at Libor plus 325 bps with a 0.75% Libor floor and has 101 soft call protection for six months.

With final terms in place, the term loan B freed up for trading in the morning, and levels were seen at 99¾ bid, par ¼ offered, a trader added.

Citigroup, Bank of America Merrill Lynch, Barclays, HSBC Securities (USA) Inc. and Credit Suisse are leading the deal that will be used to refinance an existing term loan and for general corporate purposes.

Closing is targeted for Friday.

AMC is a Leawood, Kan.-based movie exhibitor.

US Farathane tops OID

Another deal to begin trading was US Farathane’s fungible $110 million add-on term loan (B2), with levels quoted at 99 5/8 bid, par 1/8 offered, a trader remarked.

Pricing on the add-on is Libor plus 575 bps with a 1% Libor floor, which matches existing term loan pricing, and the new debt was sold at an original issue discount of 99.25.

Bank of America Merrill Lynch, Barclays and Morgan Stanley Senior Funding Inc. are the leads on the deal.

Proceeds will be used to fund an acquisition and add cash to the balance sheet.

US Farathane is an Auburn Hills, Mich.-based provider of highly engineered plastic injection-molded components.

Men’s Wearhouse falls

Also in trading, Men’s Wearhouse’s term loan dropped by three points to 89 bid, 90 offered on the back of fiscal third-quarter numbers being announced late Wednesday, a trader remarked.

For the quarter, the company reported a net loss of about $27.2 million, or $0.56 per share, versus net income of around $6.8 million, or $0.14 per share, in the 2014 third quarter.

Net sales for the quarter were about $865.4 million, down from net sales of around $890.6 million in the prior year.

The company said in a news release that comparable sales at Jos. A. Bank, which was acquired in 2014, decreased 14.6%, far below earlier expectations, primarily driven by a decline in traffic.

Men’s Wearhouse warned that if the Jos. A. Bank trend continues through the remainder of the quarter, the company may miss the lower end of the guidance given on Nov. 5.

In the Nov. 5 press release, the Houston-based specialty retailer of men’s apparel outlined expectations for adjusted earnings per share for fiscal 2015 in the range of $1.75 and $2.00.

Belk closes

In other news, the buyout of Belk Inc., a Charlotte, N.C.-based department store company, by Sycamore Partners for $68.00 per share in cash has been completed, according to a news release.

To help fund the transaction, Belk got a $2.4 billion credit facility that includes a $900 million ABL revolver and a $1.5 billion seven-year first-lien covenant-light term loan B (B2/B+).

Pricing on the term loan is Libor plus 475 bps with a 1% Libor floor, and it was sold at an original issue discount of 89. The loan has 101 soft call protection for one year.

During syndication, the term loan was downsized from $1.6 billion as the revolver was upsized from $800 million, pricing firmed at the high end of the Libor plus 450 bps to 475 bps talk, and the discount widened from talk of 98 to 98.5.

Morgan Stanley, Bank of America Merrill Lynch, Jefferies Finance LLC, Credit Suisse, Deutsche Bank, Nomura Securities International Inc., RBC Capital Markets LLC and MCS Capital Markets led the debt.

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