Staples unmoved by escrow, merger extension plans; Endurance, Bowie, Armacell ready deals

By Sara Rosenberg

New York, Jan. 20 – Staples Inc.’s term loan B held steady in the secondary market on Wednesday as the company surfaced with plans to fund the debt into escrow next month in connection with the extension of the termination date of its merger agreement with Office Depot Inc.

Meanwhile, in the primary market, Endurance International Group Holdings Inc. (EIG Investors Corp.), Bowie Resources Partners LLC (Western Megawatt Resources LLC) and Armacell joined the near-term new issue calendar.

Staples steady in trading

Staples’ term loan B was unchanged at 98 7/8 bid, 99 3/8 offered in trading on Wednesday after news hit that the company intends to fund the loan into escrow on Feb. 2, according to a trader.

The funds can remain escrow until Sept. 10, with the option for a two-month extension, subject to payment of a 25-basis-point extension fee, a source remarked.

The move to put the funds in escrow is a result of a proposal to push out the merger termination date between Staples and Office Depot to May 16 from Feb. 4 to allow for the completion of ongoing federal district court litigation with the Federal Trade Commission.

If the merger is terminated, lenders will be paid out at par.

Staples held a lender call at 3 p.m. ET to discuss the plans with lenders, the source added.

Barclays is the administrative agent on the debt.

Staples is a Framingham, Mass.-based retailer of office supplies. Office Depot is a Boca Raton, Fla.-based provider of products, services and solutions for the workplace.

Endurance on deck

Switching to the primary market, Endurance International set a bank meeting for 3 p.m. ET in New York on Thursday to launch $910 million of bank debt (B1/B) split between a $175 million five-year revolver and a $735 million incremental seven-year first-lien term loan, according to a market source.

The term loan is talked with a 1% Libor floor and 101 soft call protection for six months, the source said. Spread and original issue discount talk are not yet available.

Commitments are due at 5 p.m. ET on Feb. 3, the source added.

Credit Suisse Securities (USA) LLC, Goldman Sachs Bank USA and Jefferies Finance LLC are leading the debt that will help fund the acquisition of Constant Contact Inc. for $32.00 per share, or about $1.1 billion.

Closing is expected this quarter, subject to Constant Contact shareholder approval, and other customary conditions, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act.

Endurance is a Burlington, Mass.-based provider of web hosting and online services. Constant Contact is a Waltham, Mass.-based online marketing company.

Bowie sets meeting

Bowie Resources Partners emerged with plans to hold a bank meeting at 10 a.m. ET in New York on Tuesday to launch a $650 million term loan B, a market source said.

Commitments are due on Feb. 8, the source added.

Deutsche Bank Securities Inc. and Citigroup Global Markets Inc. are leading the deal that will be used to fund the acquisition of the El Segundo and Lee Ranch mining complexes in New Mexico and the Twentymile mining complex in Colorado from Peabody Energy Corp. for $358 million in cash plus the assumption of certain liabilities, and to refinance existing debt.

Closing is expected this quarter, subject to customary conditions and regulatory approvals.

Bowie is a Louisville, Ky.-based coal producer.

Armacell coming soon

Armacell is scheduled to hold a bank meeting in London for Friday to launch a €660 million equivalent credit facility that consists of a €100 million six-year revolver priced at Euribor plus 400 bps, a €445 million seven-year covenant-light term loan B with no floor and a €115 million U.S. dollar equivalent eight-year covenant-light second-lien term loan with a 1% floor, according to a market source.

Spread talk on the term loans is not yet available, the source said.

Commitments are due on Feb. 3.

Deutsche Bank Securities Inc., BNP Paribas Securities Corp. and HSBC Securities are the joint bookrunners on the deal, and ING is a mandated lead arranger.

Proceeds will be used to help fund the buyout of the company by Blackstone and Kirkbi from Charterhouse and for general corporate purposes.

Closing is expected this quarter, subject to approval from the relevant antitrust authorities.

Armacell is a Luxembourg-based manufacturer of flexible foams for equipment insulation.

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