iStar, Fairmount, CDW, Arizona Chem, FoxCo, Sinclair break; Warner Chilcott may retranche

By Sara Rosenberg

New York, March 11 - iStar Financial Inc. made a new round of changes to its term loan debt, increasing pricing for a second time on a downsized A-2 while raising A-1 pricing as well and then the deal proceeded to free up for trading in the late afternoon.

Fairmount Minerals Ltd.'s term loan B also hit the secondary market on Friday with levels quoted above its original issue discount price, and CDW LLC, Arizona Chemical Inc., FoxCo Acquisition Sub LLC, AVG Technologies and Sinclair Television Group Inc. broke, too.

In more loan happenings, Warner Chilcott plc is considering moving some funds out of its term loan B and into its term loan A to take advantage of the cheaper pricing and the large bank group, RBS International Direct Marketing revised structure and pricing, and Kindred Healthcare Inc. released price talk on its newly launched deal.

Also, Wesco Aircraft Hardware Corp., Western Refining Inc., Postmedia Network Inc., Laureate Education Inc. and Digital Cinema Implementation Partners LLC are getting ready to launch new loans during the week of March 14.

Additionally, Grocery Outlet Inc.'s credit facility is moving along nicely with a number of orders already in the book, but not every deal is being met with success, as illustrated by Swift Transportation Co LLC's removal of its repricing transaction from market due to investor pushback.

iStar reworks pricing

iStar made some more changes to its proposed credit facility, lifting pricing on both term loans, and widening the original issue discount while also adding call protection to the A-1, according to a market source.

The $1.45 billion term loan A-2 (B2/NA/B+) due June 2014, downsized from $1.5 billion, is now priced at Libor plus 575 basis points, up from most recent talk of Libor plus 550 bps and from initial talk of Libor plus 475 bps, the source said. There is still a 1.25% Libor floor and an original issue discount of 981/2.

Meanwhile, the $1.5 billion term loan A-1 (B1/NA/BB-) due June 2013 is now priced at Libor plus 375 bps, up from Libor plus 325 bps, and the original issue discount was increased to 99 from 991/2, the source continued. The 1.25% Libor floor was left unchanged.

Both term loans have 101 soft call protection for one year and par ½ soft call protection for the following six months. This feature was added to the A-2 on Thursday and to the A-1 on Friday.

iStar frees up

After the final changes were made to iStar's new loans, the debt allocated and broke for trading, with the term loan A-1 quoted at 99 bid, 99½ offered, and the term loan A-2 quoted at 98½ bid, 99 offered, a trader told Prospect News.

Amortization payments will be applied first to the A-1 tranche and then to the A-2 tranche.

J.P. Morgan and Barclays Capital are the lead banks on the $2.95 billion deal, down from $3 billion, that will be used to refinance the company's secured loan facilities due in June 2011 and 2012, as well as to repay a portion of its unsecured debt maturing in 2011.

Security is a first lien on a diversified $3.75 billion collateral pool, comprised primarily of performing loans and corporate tenant lease assets.

iStar is a New York-based finance and investment company focused on the commercial real estate industry.

Fairmount starts trading

Fairmount Minerals' $1 billion six-year term loan B (B1/BB-) made its way into the secondary market on Friday, with levels quoted at 99¾ bid, par ¼ offered on the open and then it moved to 99 7/8 bid, par ¼ offered, according to a trader.

Pricing on the loan is Libor plus 400 bps with a 1.25% Libor floor, and it was sold at an original issue discount of 991/2. There is 101 soft call protection for one year.

During syndication, pricing was flexed up from talk of Libor plus 350 bps to 375 bps and the offer price was changed from par.

Barclays, KeyBank, Bank of America Merrill Lynch and PNC are the lead banks on the deal that will be used by the Chardon, Ohio-based producer of industrial sand to fund a $300 million dividend and to repay an existing term loan A and term loan B.

The B loan is getting repaid at 101 due to soft call protection, and the A loan is being repaid at par.

Fairmount amending loan

In addition to getting a term loan B, Fairmount is amending its credit agreement to allow for the new deal, to remove the interest coverage ratio and capital expenditures requirement and to set the leverage ratio at 4.75 times throughout the life of the deal, instead of having steps.

Revolver and term loan A lenders are being offered a 25 bps amendment fee.

Pro forma leverage for the dividend recapitalization is 4.0 times and LTM EBITDA is over $250 million. At closing of the original deal in August 2010, the company had $165 million of LTM EBITDA and leverage was about 4.3 times.

The 2010 deal was obtained to help fund the company's buyout by American Securities. At close, the A loan was sized at $150 million and the B loan was sized at $550 million. Both were priced at Libor plus 450 bps with a 1.75% Libor floor and were sold at a discount of 981/2. Also, both have a step-down to Libor plus 425 bps when leverage is less than 2.75 times and after receipt of June 30 financials.

CDW par bid

CDW's $1.1 billion senior secured term loan B-2 due 2017 freed up as well, with levels quoted at par bid, par ¼ offered, according to a trader.

Pricing on the loan is Libor plus 325 bps with a 1.25% Libor floor, and it was sold at par. There are pricing step-downs based on leverage and 101 soft call protection for six months.

J.P. Morgan and Morgan Stanley are the lead banks on the deal that is being used to reprice a term loan obtained late last year as part of an amendment and extension process.

Pricing on the 2010 loan is Libor plus 500 bps, with step-downs to Libor plus 475 bps at 4.0 times senior secured leverage and to Libor plus 450 bps at 3.5 senior secured leverage.

CDW is a Vernon Hills, Ill.-based provider of technology products and services to business, government and education customers.

Arizona Chem breaks

Arizona Chemical's $430 million term loan B (B+) also emerged in the secondary market, with levels quoted at par ¼ bid, par 5/8 offered, according to a trader.

Pricing on the loan is Libor plus 325 bps, after firming up a few days ago at the tight end of the Libor plus 325 bps to 350 bps talk. There is a 1.5% Libor floor and 101 soft call protection for one year, the debt was sold at par.

Goldman Sachs is the left lead bank on the bank deal that is being used to reprice the company's existing term loan B obtained late last year to help fund its buyout by American Securities.

Pricing on the existing loan is Libor plus 500 bps with a 1.75% Libor floor, and it was sold at an original issue discount of 981/2. There is 101 soft call protection for one year.

Arizona Chemical is a Jacksonville, Fla., supplier of pine chemicals to the adhesives, inks and coatings and oleochemicals markets.

FoxCo tops OID

Yet another deal to break on Friday was FoxCo Acquisition's $444.7 million term loan (B1/B+) due July 2015, with levels quoted at 99 7/8 bid, par 1/8 offered, according to a market source.

Pricing on the loan is Libor plus 375 bps with a 1% Libor floor, and it was sold at an original issue discount of 993/4. There is 101 soft call protection for one year.

Proceeds are being used to reprice an existing term loan that is priced at Libor plus 425 bps with a 3.25% Libor floor through Sept. 30. It was sold at a discount of 97 when it was obtained in 2008 to fund the acquisition of eight FOX network affiliated television stations from News Corp.

Deutsche Bank, UBS and Bank of America Merrill Lynch are the lead banks on the deal for the Fort Wright, Ky.-based owner and operator of television stations.

AVG hits secondary

AVG Technologies' $235 million five-year term loan B (B1/B+) was quoted at 98½ bid, 99¼ offered after breaking for trading late Friday, according to a market source.

Pricing on the loan is Libor plus 600 bps with a 1.5% Libor floor, and it was sold at an original issue discount to 98. There is 101 soft call protection for one year.

During syndication, pricing was flexed up from Libor plus 475 bps to 500 bps and the discount widened from 99.

Other changes made to the deal included reducing the restricted payment availability and moving the opening leverage to 3.0 times from 3.5 times previously, with step-downs, and amortization on the B loan was set at 10% per annum.

J.P. Morgan is the lead bank on the deal that is being used by the Chelmsford, Mass.-based security software maker to fund a dividend payment.

Sinclair levels surface

Sinclair Television Group freed up late day as well, with the $115 million five-year term loan A quoted ay 99 5/8 bid, par 1/8 offered and the $225 million 51/2-year term loan B quoted at par bid, par ½ offered, according to a trader.

Pricing on the term loan A is Libor plus 225 bps and it was sold at a discount of 99 5/8, and pricing on the term loan B is Libor plus 300 bps with a 1% Libor floor, and it was sold at a discount of 99 7/8. The B loan includes 101 soft call protection for six months.

During syndication, the term loan A was upsized from $100 million and the term loan B was downsized from $240 million. Also, pricing on the term loan B was reduced from Libor plus 325 bps.

JPMorgan is the lead bank on the $340 million deal (Baa3/BB+).

Sinclair refinancing

Proceeds from Sinclair's new loans, along with cash and/or revolver borrowings, will be used to repay the company's existing $270 million term loan B that matures in October 2015 and to redeem $70 million of 6% convertible debentures due 2012.

The existing B loan was obtained in August 2010 at pricing of Libor plus 400 bps with a 1.5% Libor floor. The loan was sold at an original issue discount of 99½ and includes 101 soft call protection for one year. It was used to repay an existing B loan.

As of Sept. 30, there was about $264 million outstanding under the term loan B.

Sinclair is a Hunt Valley, Md.-based television broadcasting company.

Warner mulls changes

Moving back to the primary, Warner Chilcott is discussing the increase of its term loan A and the reduction of its term loan B by an equivalent amount, with the amount that might be shifted unclear at this point, according to a market source.

The source said that both tranches are oversubscribed, but the shift is being considered because the term loan A has lower pricing and there is a "big bank group."

As launched, the five-year term loan A is sized at $750 million and talked at Libor plus 300 bps with a 1% Libor floor, and the seven-year term loan B is sized at $2.25 billion and talked at Libor plus 325 bps with a 1% Libor floor, a par offer price and 101 soft call protection for six months.

The company's $3.25 billion credit facility (BBB-) also includes a $250 million five-year revolver talked at Libor plus 300 bps with no Libor floor.

Warner lead banks

J.P. Morgan, Bank of America Merrill Lynch, Goldman Sachs and Morgan Stanley are the lead banks on Warner Chilcott's credit facility that will be used to refinance existing bank debt, which as of Dec. 31, had $3.419 billion of term loans outstanding and no revolver borrowings.

In August 2010, the company got a $1.02 billion 51/2-year term loan B priced at Libor plus 425 bps with a 2.25% Libor floor that was sold at an original issue discount of 99 and includes 101 soft call protection for one year. It also obtained a $480 million four-year term loan A priced at Libor plus 425 bps.

At the same time in 2010, the company amended its existing credit facility, increasing pricing on an existing term loan A to Libor plus 375 bps and on an existing term loan B to Libor plus 400 bps, with both having a 2.25% Libor floor.

Warner Chilcott, an Ireland-based specialty pharmaceutical company, expects to close on the refinancing in mid-March.

RBS tweaks deal

RBS International Direct Marketing made a number of revisions to its credit facility, including moving funds between the term loan A and the term loan and flexing pricing higher on all tranches, according to a market source, who said that allocations are expected to go out late in the March 14 week.

The term loan A is now $70 million, down from $75 million, and pricing on the tranche as well as on a $40 million revolver moved to Libor plus 400 bps, up from Libor plus 375 bps, the source said.

On the flip side, the term loan B was changed to $150 million from $145 million, and pricing flexed to Libor plus 500 bps from Libor plus 475 bps, the source remarked. There is still a 1.5% Libor floor and an original issue discount of 99.

Bank of America Merrill Lynch and Fifth Third Bank are the lead banks on the $260 million credit facility that will be used by the direct marketing company to refinance existing debt.

Kindred talk emerges

Kindred Healthcare held a bank meeting on Friday to kick off syndication on its proposed $1.3 billion senior secured credit facility, and in connection with the event, price talk was announced, according to a market source.

The $600 million five-year asset-based revolver is being talked at Libor plus 250 bps and the $700 million seven-year term loan B (B+) is being talked at Libor plus 350 bps with a 1.25% to 1.5% Libor floor, an original issue discount of 99 and 101 soft call protection for one year, the source said.

J.P. Morgan, Morgan Stanley and Citigroup are the lead banks on the deal.

Proceeds will be used to help fund the acquisition of RehabCare Group Inc., a St. Louis-based provider of physical rehabilitation services.

Kindred acquisition details

Under the terms of the agreement, Kindred will pay each of RehabCare's common stock holders $26.00 per share in cash and 0.471 of a share of Kindred common stock. The equity for the transaction is around $228 million.

The transaction is valued at $1.3 billion, including $400 million of existing debt.

Adjusted leverage of the combined company is projected to be about 4.5 times at the end of 2011.

Closing on the acquisition is expected on or about June 30, subject to approvals by the stockholders of both companies, completion of financing, clearance under the provisions of the Hart-Scott-Rodino Act of 1976 and the receipt of licensure and regulatory approvals.

Kindred Healthcare is a Louisville, Ky.-based health care services company.

Wesco sets launch

Wesco Aircraft Hardware has set a bank meeting for Wednesday to launch a $765 million credit facility that will be used to refinance existing debt, according to a market source.

The facility consists of a $150 million five-year revolver, a $200 million five-year term loan A and a $415 million six-year term loan B, the source said.

Bank of America Merrill Lynch and Barclays are the joint lead arrangers on the deal and bookrunners, and J.P. Morgan, Morgan Stanley, RBC and Sumitomo are also bookrunners.

Wesco is a Valencia, Calif.-based integrated inventory management services provider and distributor of hardware and other components to the aerospace industry.

Western Refining plans loan

Western Refining scheduled a conference call for 2 p.m. ET on Monday to launch a $325 million covenant-light term loan B due March 15, 2017 that will include a 1.5% Libor floor and hard call protection of 102 in year one and 101 in year two with par prepayment for select asset sales, according to a market source.

Bank of America Merrill Lynch is the sole lead arranger on the deal that will be used to refinance debt.

The company's existing term loan due May 30, 2014 is priced at Libor plus 750 bps with a 3.25% Libor floor. At Dec. 31, the fair value of the term loan was $346.9 million.

Western Refining is an El Paso, Texas-based independent refining and marketing company.

Postmedia readies deal

Postmedia Network has scheduled a conference call on Monday to launch a $365 million term loan B, according to a market source.

J.P. Morgan is the lead bank on the deal that will be used to refinance existing term loan A and B borrowings.

Postmedia Network is an Ontario-based publisher of paid English-language daily newspapers in Canada.

Laureate coming soon

Laureate Education told potential lenders that it will be holding a bank meeting at 2 p.m. ET on Monday to launch a new credit facility, according to a market source.

Details on structure and use of proceeds on the new facility are expected to come out on Monday, the source said.

Citigroup, Barclays, Credit Suisse, Goldman Sachs, J.P. Morgan and KKR Capital Markets are leading the new deal.

Laureate rises

After the news of the financing came out, Laureate's strip of institutional bank debt moved up to 99¾ bid, par ¼ offered from 99 1/8 bid, 99 5/8 offered, according to a trader.

The Baltimore-based provider of higher educational services' incremental loan was quoted at par ¾ bid, 101¼ offered, unchanged on the day, the trader said.

In the fall of 2009, the company got a $280 million term loan priced at Libor plus 500 bps with a 2% Libor floor, that was sold at a discount of 98 and has call protection of 102 in year one and 101 in year two. The debt was used to repay revolver borrowings.

And, in 2007, as part of its buyout by an investment group, the company got a $400 million revolver, and a $775 million term loan, including a $100 million delayed-draw loan, priced at Libor plus 325 bps that was sold at a discount of 961/4.

Digital Cinema floats talk

Digital Cinema Implementation Partners began circulating price talk on its $220 million six-year term loan that is scheduled to launch with a conference call on Tuesday, according to a market source.

The term loan is being talked at Libor plus 350 bps to 375 bps with a 1.25% Libor floor, an original issue discount of 99½ and 101 soft call protection for one year, the source said.

J.P. Morgan is the lead bank on the deal that will be used to refinance existing term loan borrowings.

Digital Cinema is a Mahwah, N.J.-based company formed by AMC Entertainment Inc., Cinemark USA Inc. and Regal Entertainment Group to facilitate the roll-out of a digital cinema infrastructure.

Grocery Outlet nets orders

Grocery Outlet's $168 million senior secured credit facility appears to moving along smoothly with over $100 million of commitments in the book by Friday morning, "banks still working" and commitments not due until Thursday, according to a market source.

The facility, which launched with a bank meeting on March 3, consists of a $25 million revolver and a $143 million term loan. Both tranches are talked at Libor plus 400 bps with a 1.5% Libor floor and are being offered at an original issue discount of 99.

Societe Generale is the administrative agent and bookrunner on the deal and a joint lead arranger with Bank of Ireland and Union Bank, who are both also co-syndication agents.

Grocery Outlet repaying debt

Proceeds from Grocery Outlet's credit facility will be used to refinance an existing credit facility that was obtained in 2009 in connection with an equity investment by Berkshire Partners LLC. The company's existing mezzanine debt is staying in place.

Pricing on the existing bank deal is Libor plus 575 bps with a 2.5% Libor floor.

With this refinancing, leverage is 2.1 times senior and 2.9 times total. The company has over 55% equity capitalization.

Grocery Outlet is a Berkeley, Calif.-based value grocery retailer with 151 stores in the Western United States.

Swift pulls deal

Meanwhile, Swift Transportation decided not to move forward with its $1.07 billion repricing term loan as the transaction would have needed some changes in order to get done, according to a market source.

Price talk on the loan had been Libor plus 350 bps with a 1.25% Libor floor, a par offer price and 101 soft call protection for one year.

The loan was going to reprice the company's $1.07 billion term loan that was obtained in December as part of a refinancing transaction at pricing of Libor plus 450 bps with a 1.5% Libor floor. It was sold at an original issue discount of 99 and includes 101 soft call protection for one year.

On Friday, the term loan was quoted at par ¾ bid, 101 1/8 offered in the secondary market, down from 101 bid, 101¼ offered before the news hit, a trader added.

Bank of America Merrill Lynch, Morgan Stanley and Wells Fargo were leading the repricing effort for the Phoenix-based transportation services company and truckload carrier.

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