Reader's upsizes, trims spread; LandSource breaks; Hanger weakens on repricing

By Sara Rosenberg

New York, Feb. 26 - The Reader's Digest Association Inc. came out with some modifications to its credit facility on Monday, such as upsizing its term loan B to compensate for a smaller bond deal, and setting pricing at the low end of guidance.

Meanwhile, in the secondary market, LandSource Communities Development LLC's credit facility freed for trading and Hanger Orthopedic Group Inc.'s term loan B came under some pressure after a repricing of the debt was launched to lenders.

Reader's Digest made some changes to its term loan B tranche, including increasing the size following a downsizing of the company's bond offering, and finalizing pricing at the tight end of talk, according to a market source.

The term loan B is now sized at $1.31 billion, up from $1.16 billion, and pricing is set at Libor plus 200 basis points, the low end of original talk of Libor plus 200 to 225 bps, the source said.

On the flip side, the company's bond deal was downsized to $600 million from $750 million, the source continued. Price talk on the bonds emerged on Monday at 9% to 9¼%.

Reader's Digest's now $1.61 billion (up from $1.46 billion) senior secured credit facility (B1/B) also includes a $300 million six-year revolver.

JPMorgan, Citigroup, Merrill Lynch and RBS Securities are the lead banks on the deal.

Proceeds from the credit facility will be used to help fund the leveraged buyout of Reader's Digest by an investor group led by Ripplewood Holdings LLC in combination with two Ripplewood portfolio companies - Direct Holdings Worldwide LLC, a direct marketer of entertainment products, and WRC Media Inc., a publisher of supplementary educational materials.

Under the LBO agreement, Reader's Digest shareholders will receive $17.00 per share in cash, for a total transaction value of about $2.4 billion.

In addition to Ripplewood, the investor group includes the J. Rothschild Group, GoldenTree Asset Management, GSO Capital Partners, Merrill Lynch Capital Corp. and Magnetar Capital.

Reader's Digest is a Pleasantville, N.Y., publisher and direct marketing company that creates and delivers products and content for magazines, books, recorded music collections, home videos and online web sites.

Crown Castle upsizes, cuts spread

Crown Castle Operating Co. increased the size of its term loan B (BB+) to $650 million from $600 million and reduced pricing to Libor plus 150 bps from original talk at launch of Libor plus 175 bps, according to a market source.

Morgan Stanley, RBS Securities and JPMorgan are the joint lead arrangers and joint bookrunners on the deal.

Proceeds from the term loan are being used to fund the company's already completed share repurchase plan, under which the company bought 17.7 million of its common shares for $600 million in cash from Fortress Investment Funds, Greenhill Capital Partners, LLC and Abrams Capital, LLC.

Crown Castle is a Houston-based provider of broadcast, data and wireless communications infrastructure services.

Infor flexes

Infor reverse flexed pricing on its first-lien term loan B, second-lien term loan and holdco senior pay-in-kind term loan, according to a market source.

Under the changes, the $375 million first-lien euro-denominated term loan B add-on (B1) is now priced at Euribor plus 300 bps, down from original talk of Euribor plus 325 bps, the source said. Earlier on in syndication, this tranche was upsized from $200 million.

The $1.41 billion second-lien term loan (Caa2/CCC) that is split into a $750 million tranche and a €507 million tranche is now priced at Libor/Euribor plus 625 bps, down from original talk of Libor/Euribor plus 650 bps, the source continued. Call protection is 102 in year one, 101 in year two and par thereafter. Earlier on in syndication, this tranche was upsized from $1.275 billion and the breakdown of U.S. and euro was revised from $475 million and €642 million.

Lastly, the $225 million U.S. 71/2-year holdco senior loan is now priced at Libor plus 800 bps PIK, down from Libor plus 825 bps PIK. Call protection is non-callable for one year, then at 103 in year two, 101 in year three and par thereafter. This tranche was added to the capital structure earlier on in syndication.

Proceeds will be used to fund a $490 million dividend and to refinance a $1.425 billion senior subordinated bridge loan.

Leverage through the first lien is 4.1 times, leverage through the second lien is 6.3 times and total leverage (including the PIK loan) is 6.6 times.

JPMorgan, Credit Suisse and Merrill Lynch are the lead banks on the $2.01 billion deal.

Infor is an Atlanta-based deliverer of fully integrated enterprise services as well as stand-alone products.

Town Sports lowers pricing

Town Sports International LLC reduced pricing on its $185 million term loan B to Libor plus 175 bps from most recent talk of Libor plus 200 bps with step down to Libor plus 175 bps when senior secured leverage is 1.5 times, according to a market source.

Originally, the loan was launched at Libor plus 225 bps, but it was reverse flexed with the addition of the step earlier on in the syndication process.

Town Sports' $260 million senior credit facility (Ba2/B+) also includes a $75 million revolver that is priced at Libor plus 225 bps, in line with original talk.

Deutsche Bank is the lead bank on the facility that will be used to fund a tender offer for the company's $169.9 million of 9 5/8% senior notes due 2011.

Allocations on the transaction are expected to go out on Tuesday, the source added.

Town Sports is a New York-based owner and operator of fitness clubs.

IPC trims add-on spread

IPC Information Systems LLC reduced pricing on its $45 million term loan add-on to Libor plus 200 bps from original talk of Libor plus 225 bps, according to a market source.

Pricing on the company's existing term loan is remaining at Libor plus 250 bps, the source added.

Goldman Sachs is the lead bank on the deal that will be used to fund the acquisition of Positron.

IPC is a New York-based provider of mission-critical communications solutions and services.

Audio Visual moves to covenant-light

Audio Visual Services Group Inc. changed its $225 million first-lien term loan B (Ba3/B) and $60 million second-lien term loan (B3/CCC+) to a covenant-light structure, according to a market source.

Price talk on the first-lien term loan B remained at Libor plus 225 bps and price talk on the second-lien loan remained at Libor plus 550 bps, the source said.

The second-lien term loan carries call protection of 102 in year one and 101 in year two.

Audio Visual's $315 million credit facility also includes a $30 million revolver (Ba3/B) talked at Libor plus 225 bps.

Lehman and Wachovia are the joint lead arrangers on the deal, with Lehman the left lead.

Proceeds will be used to help fund the leveraged buyout of the company by Kelso & Co.

Audio Visual is a Long Beach, Calif., provider of audiovisual and event technology support to hotels, event production companies, trade associations, convention centers and corporations.

LandSource frees to trade

Switching to trading news, LandSource Communities Development's credit facility hit the secondary market with the $1.05 billion term loan B ending the session at 101 3/8 bid, 101 5/8 offered and the $300 million second-lien term loan ending the day at 102 bid, 102¼ offered, according to a trader.

The first-lien term loan B is priced at Libor plus 275 bps, and the second-lien term loan is priced at Libor plus 450 bps with call protection of 102 in year one and 101 in year two. During syndication, pricing on the first-lien term loan B was reduced from original talk of Libor plus 300 bps and pricing on the second-lien ended up at the high end of guidance that was in the Libor plus 400 bps to 450 bps area.

LandSource's $1.55 billion credit facility also includes a $200 million revolver priced at Libor plus 275 bps.

Barclays is the lead bank on the deal.

LandSource is a joint venture between Lennar Corp. and LNR Property Corp., and recently the two companies agreed to admit a new partner into the venture, MW Housing Partners. The transaction with MW is expected to close in February.

LandSource's primary investment is The Newhall Land and Farming Co., which owns 15,000 acres in Santa Clarita Valley, Calif.

Hanger trades down on repricing

Hanger Orthopedic's term loan B was a touch softer on Monday after the company launched a repricing amendment via a conference call to investors, according to a trader.

The term loan B ended the day at par ½ bid, 101 offered, down from previous levels of par ¾ bid, 101 1/8 offered, the trader said.

Under the proposal, the company is looking to lower the term loan B spread to Libor plus 200 bps from Libor plus 250 bps.

In addition, the company is seeking to remove the interest coverage covenant from the loan.

Citigroup is the lead bank on the deal for the Bethesda, Md., provider of orthotic and prosthetic patient-care services.

Kentucky Data Link closes

Q-Comm completed its acquisition of Journal Communications' telecommunications subsidiary, Norlight Telecommunications, Inc. for $185 million, according to a news release.

To help fund the transaction, Kentucky Data Link got a new $280 million senior secured credit facility (B1) consisting of a $40 million revolver and a $240 million term loan.

Bank of America acted as the lead bank on the deal.

Kentucky Data Link is an Evansville, Ind., wholesale transport service provider.

B&G closes

B&G Foods Inc. closed on its new $230 million six-year term loan C (Ba2/B+) priced at Libor plus 200 bps.

During syndication, the tranche was upsized from $225 million and pricing was lowered from original talk of Libor plus 225 bps.

Lehman and Credit Suisse acted as the lead banks on the deal.

Proceeds from the term loan C were used to fund the acquisition of the Cream of Wheat and Cream of Rice hot cereal brands from Kraft Foods Global, Inc. for about $200 million in cash and to refinance some existing term loan debt.

B&G is a Parsippany, N.J., seller and distributor of high-quality, shelf-stable foods.

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