Ascena Retail, Ferrara, Valeant free up; Chesapeake rises; Realogy rallies with IPO news

By Sara Rosenberg

New York, June 8 - Ascena Retail Group Inc. finalized pricing on its term loan B at the low end of guidance, added leverage-based step downs and broke for trading on Friday afternoon above its original issue discount price.

Furthermore, Ferrara Candy Co. Inc. and Wastequip LLC set the original issue discount on their term loan B's in the middle of revised guidance, and Valeant Pharmaceuticals International Inc. upsized its incremental loan while flexing pricing higher. All of the companies' debt then made its way into the secondary market as well.

Also in trading, Chesapeake Energy Corp.'s unsecured term loan was higher and very active as the company announced a definitive agreement to sell its midstream assets, and Realogy Corp.'s extended strip of bank debt was better with initial public offering plans.

In more loan happenings, LS Power, LHP Hospital Group Inc. and Tank Holding Corp. surfaced with new credit facilities that will be coming to market in the next few days.

Ascena starts trading

Ascena Retail's $300 million six-year term loan B (Ba2/BB+) hit the secondary market on Friday, with levels quoted at 99½ bid, according to a trader.

Pricing on the loan is Libor plus 375 basis points with step-downs to Libor plus 350 bps at 0.75 times total leverage and Libor plus 325 bps at 0.5 times total leverage, effective upon delivery of the company's fiscal quarter end January 2013 financials. There is a 1% Libor floor as well as 101 soft call protection for one year, and the debt was sold at an original issue discount of 99.

Early in the morning, the spread on the loan firmed at the tight side of the Libor plus 375 bps to 400 bps talk and the leverage-based pricing grid was added. Lenders were given until noon ET to recommit to the transaction.

J.P. Morgan Securities LLC and Bank of America Merrill Lynch are leading the deal.

Ascena buying Charming

Proceeds from Ascena Retail's term loan B will be used to help fund the acquistion of Charming Shoppes Inc. for $7.35 per share, in a transaction valued at roughly $890 million.

Other funds for the transaction will come from a $175 million draw under an existing ABL revolver that is expected to be upsized to $250 million from $200 million.

Pricing on the revolver can range from Libor plus 200 bps to 250 bps.

Closing on the acquisition is anticipated to occur this quarter, subject to customary conditions and approvals and the tender of at least 80% of the shares.

Ascena is a Suffern, N.Y.-based specialty retailer of apparel for women and tween girls. Charming Shoppes is a Bensalem, Pa.-based retailer specializing in women's plus-size apparel.

Ferrara Candy breaks

Another deal to free up was Ferrara Candy, with its $425 million six-year covenant-light term loan B (B2/B) quoted at 97 bid, 98 offered, according to a market source.

Pricing on the B loan is Libor plus 625 bps with a 1.25% Libor floor, and it was sold at an original issue discount of 961/2. There is soft call protection of 102 in year one and 101 in year two.

The discount came at the mid point of revised talk of 96 to 97 and wide of initial talk of 98 to 99, the source said. Also, when the discount was initially revised, pricing flexed up from guidance of Libor plus 525 bps to 550 bps, the tenor was shortened from seven years, and the call protection was modified.

The general line candy manufacturer's $550 million credit facility also includes a $125 million asset-based revolver.

Morgan Stanley Senior Funding Inc. and Goldman Sachs & Co. are leading the deal that will be used to fund the creation of the company through the merger of Round Lake, Minn.-based Farley's & Sathers Candy Co. Inc. and Forest Park, Ill.-based Ferrara Pan Candy Co. Inc.

Wastequip tops OID

Wastequip's $150 million term loan B (B3/BB-) also freed up on Friday, with levels seen wrapped around 98, a market source told Prospect News.

Pricing on the loan Libor plus 675 bps with a 1.5% Libor floor, and it was sold at an original issue discount of 971/2. There is call protection of 103 in year one and 101 in year two.

During syndication, discount firmed at the midpoint of revised talk of 97 to 98 and wide of original talk of 98, the spread was lifted from talk of Libor plus 600 bps to 625 bps, the floor widened from 1.25% and the call premium was sweetened from just 101 soft call protection for one year.

The company's $190 million senior secured deal also includes a $40 million revolver (Ba2/BB-).

Goldman Sachs & Co. is leading the facility that will be used to fund a recapitalization under which first-lien lenders are expected to get a roughly 90% equity stake in the company.

Wastequip is a Charlotte, N.C.-based manufacturer of waste handling equipment and recycling equipment.

Valeant frees up

Valeant Pharmaceuticals' $600 million incremental term loan due Feb. 13, 2019 broke too, with levels quoted at 97¾ bid, 98½ 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 971/2.

Through the syndication process, the loan was upsized from $500 million, pricing was increased from Libor plus 275 bps and the discount came at the wide end of the 97½ to 98 talk, the source said.

Goldman Sachs & Co. is leading the deal that will repay borrowings under the company's existing $275 million revolving credit facility and for general corporate purposes, including acquisitions.

Closing is expected this month, subject to market and other customary conditions.

Valeant is a Mississauga, Ont.-based specialty pharmaceutical company.

Chesapeake trades up

In more trading news, Chesapeake Energy's unsecured term loan was stronger in trading following news that the company is selling its midstream assets in three separate transactions for total expected cash proceeds of more than $4 billion, according to a trader.

Specifically, Chesapeake has agreed to sell its ownership interest in Chesapeake Midstream Partners LP, an Oklahoma City-based gathering and processing master limited partnership, to Global Infrastructure Partners for $2 billion,

Also, Global Infrastructure signed a letter agreement to acquire some midstream assets from Chesapeake's wholly owned subsidiary, Chesapeake Midstream Development, and Chesapeake Midstream Partners signed a letter agreement to acquire from Chesapeake certain Mid-Continent gathering and processing assets -with these sales expected to generate over $2 billion in proceeds.

After the news hit in the morning, Chesapeake's term loan moved to 99 bid, 99¼ offered, from 98½ bid, 98¾ offered on Thursday, and by late afternoon it was 99 bid, 99 3/8 offered, the trader said.

Chesapeake paydown expected

The trader explained the Chesapeake's term loan was better with the asset sale announcement since investors are expecting a repayment with the proceeds.

The $4 billion term loan was syndicated last month, at which time the company said that it planned to refinance the deal in the near-term with proceeds from contemplated asset sales.

Also, the loan is structured to encourage the paydown, the trader remarked, as pricing increases over time. Through Dec. 31, pricing is Libor plus 700 bps with a 1.5% Libor floor, but that moves to Libor plus 800 bps if, prior to Jan. 1, 2013, the company uses proceeds from asset sales or financing transactions to repay revolver debt and to Libor plus 1,000 bps if any amounts are outstanding after Jan. 1, 2013.

The Chesapeake Midstream Partners sale is expected to close by June 29.

Chesapeake is an Oklahoma City-based producer of natural gas as well as oil and natural gas liquids, and a driller of new wells.

Realogy gains on IPO

Realogy's extended strip of first-lien loans rallied to 93 bid, 94 offered from 90¾ bid, 91¾ offered as the company's parent, Domus Holdings Corp., filed for an initial public offering of common stock, according to a trader.

Proceeds from the stock sale will be used to repay existing debt and to redeem any outstanding convertible notes at a price of to 90.

Some of the company's security holders, including Apollo Management and Paulson & Co. Inc., have indicated that they intend to convert all of their convertible notes into class A common stock, representing in the aggregate about $2 billion of the notes.

Realogy is a Parsippany, N.J.-based provider of real estate and relocation services.

LS Power deal emerges

Over in the primary, LS Power announced plans to hold a bank meeting at 3 p.m. ET in New York on Monday to launch a proposed $750 million seven-year first-lien term loan that is being issued by LSP Madison Funding LLC, according to a market source.

Credit Suisse Securities (USA) LLC, Citigroup Global Markets Inc. and Morgan Stanley Senior Funding Inc. are the lead banks on the deal that will be used to refinance existing project level debt, fund reserve accounts, fund a one-time distribution to the sponsor and for general corporate purposes.

Commitments will be due on June 25, the source added.

LS Power is a New York-based company that has a diversified portfolio of power generating facilities.

LHP coming soon

Also joining the calendar was LHP Hospital Group Inc., as the company scheduled a bank meeting for Tuesday to launch a $375 million credit facility, according to a market source.

The facility consists of a $100 million revolver and a $275 million term loan, the source said, adding that price talk is not yet available.

Citigroup Global Markets Inc., Morgan Stanley Senior Funding Inc., Bank of America Merrill Lynch and Regions Bank are leading the deal that will be used to refinance existing debt and fund acquisitions.

LHP Hospital is a Plano, Texas-based provider of hospital capital and expertise to not-for-profit hospitals and hospital systems.

Tank readies loan

Tank Holding set a bank meeting for Tuesday as well, at which time it will launch a $405 million credit facility, according to a market source.

GE Capital Markets and RBC Capital Markets LLC are leading the deal that consists of a $50 million six-year revolver and a $355 million seven-year covenant-light term loan, the source said.

Proceeds will be used to help fund the company's buyout by Leonard Green & Partners from Olympus Partners.

Tank Holding is a Lincoln, Neb.-based manufacturer of polyethylene and steel material handling products.

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