Microsemi, DigitalGlobe set pricing, break; Emdeon term loan B gets strong reception

By Sara Rosenberg

New York, Oct. 7 - Microsemi Corp. finalized pricing on its term loan B, with the coupon coming at the high end of guidance but the discount coming at the low end, and then the deal freed up for trading above its discount price.

Also firming pricing and hitting the secondary market was DigitalGlobe, with the term loan B spread and discount coming at the wider side of talk and trading levels seen higher than the original issue discount level as well.

In other news, Emdeon Inc.'s term loan B is already oversubscribed, AGCO Corp. nailed down timing on the launch of its unsecured all pro rata credit facility, and Renaissance Learning Inc. is getting ready to firm pricing and allocate its credit facility in the next few days.

Microsemi firms details

Microsemi announced on Friday that pricing on its $800 million senior secured term loan B (BB) due Feb. 2, 2018 ended up at Libor plus 450 basis points with a 1.25% Libor floor and an original issue discount of 98, according to a market source.

By comparison, price talk on the loan had been Libor plus 425 bps to 450 bps with a 1.25% Libor floor and a discount of 97 to 98.

The 101 soft call protection for one year was left unchanged.

With this deal, the company is basically amending, restating and extending its existing $375 million term loan B that was obtained a few months ago at pricing of Libor plus 300 bps with a 1% Libor floor and sold at par. It is getting $425 million of new term loan B borrowings.

At close, debt to EBITDA will be about 3.0 times.

Morgan Stanley Senior Funding Inc. is the lead arranger and bookrunner on the loan.

Microsemi trades atop OID

After setting pricing, Microsemi's term loan B made its way into the secondary market, with levels quoted at 99¾ bid, par ¼ offered, according to a market source.

On top of refinancing the existing B loan debt, proceeds from the new term loan B will be used to help fund the acquisition of Zarlink Semiconductor Inc. for C$3.98 in cash per share and about C$1.6 in cash per 6% unsecured subordinated convertible debenture. The total transaction value is roughly $525 million, net of Zarlink's cash which is currently $107 million.

A tender offer for Zarlink's shares and debentures expires on Oct. 12, and closing is subject to customary conditions, including the tender of 66 2/3% of the outstanding shares.

Microsemi is an Aliso Viejo, Calif.-based provider of semiconductor services. Zarlink is an Ottawa, Canada-based designer of mixed-signal semiconductor products for communications and medical applications.

DigitalGlobe finalizes terms

Like Microsemi, DigitalGlobe firmed pricing on its credit facility, with the spread on the $500 million term loan B coming at Libor plus 450 bps versus talk of Libor plus 425 bps to 450 bps, and the discount coming at 971/2, compared to talk of 97½ to 98, a market source said.

As before, the B loan has a 1.25% Libor floor and 101 soft call protection for one year.

The company's $600 million senior secured credit facility (Ba3/BB+) also includes a $100 million revolver.

Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC are the lead banks on the deal, and Citigroup Global Markets Inc., Barclays Capital Inc. and UBS Securities LLC are involved as well.

DigitalGlobe hits secondary

DigitalGlobe's term loan B broke for trading shortly after final pricing was revealed, with levels quoted at 98 bid, 99 offered, the source remarked.

Proceeds from the credit facility will be used to fund a tender offer that expires on Oct. 25 for the company's $355 million of 10½% senior secured notes due 2014 and for general corporate purposes, including stock repurchases and acquisitions.

The tender offer is subject to completion of the new debt financing and a majority of notes being tendered.

DigitalGlobe is a Longmont, Colo.-based content provider of high-resolution earth imagery products and services.

Emdeon well met

In more loan happenings, Emdeon's $1.2 billion seven-year term loan B has received so much demand that it was already oversubscribed by Friday, just one day after the official bank meeting took place, according to a market source.

The B loan is talked at Libor plus 550 bps to 575 bps with a 1.25% Libor floor and an original issue discount of 96 to 97, and there is 101 soft call protection for one year, as well as a maximum first-lien net leverage ratio and a minimum consolidated cash interest coverage ratio, sources remarked.

By comparison, filings with the Securities and Exchange Commission had outlined expected pricing on the term loan B at Libor plus 475 bps with a 1.25% Libor floor and had said it would be a covenant-light deal.

The company's $1.325 billion senior secured credit facility (Ba3) also includes a $125 million five-year revolver.

Emdeon funding buyout

Proceeds from Emdeon's credit facility will be used to help fund its purchase by Blackstone Capital Partners VI LP for $19.00 per share in cash. The transaction is valued at about $3 billion.

Bank of America, Citigroup and Barclays are the joint lead arrangers and bookrunners on the credit facility, and Goldman Sachs & Co. is a bookrunner as well.

Commitments are due on Oct. 14, with closing and funding expected to occur during the week of Oct. 31.

Closing is subject to customary conditions, including approval by Emdeon;s stockholders, which will be sought at a Nov. 1 meeting, and clearance under the Hart-Scott-Rodino Act.

Following completion of the transaction, Hellman & Friedman will maintain a significant minority equity interest in the company.

Emdeon plans notes

Other funds for Emdeon's buyout will come from a $375 million eight-year senior notes offering. for which a roadshow will take place from Oct. 12 through Oct. 18, $375 million of notes privately placed with affiliates of Goldman Sachs, $870 million of equity and the rollover of about $330 million of equity.

Because of the decision to privately place a portion of the notes, the company reduced the size of its bridge loan commitment to $375 million, regulatory filings said.

Pricing on the bridge loan is Libor plus 850 bps for the first 60 days. Thereafter, interest will be payable at a rate equal to the senior cap. There is a 1.25% Libor floor.

Emdeon is a Nashville-based provider of revenue and payment cycle management services, connecting payers, providers and patients in the U.S. health care system.

AGCO sets timing

AGCO was targeting holding a bank meeting for its $900 million five-year unsecured credit facility on Oct. 18, and that date has now been firmed up, a market source told Prospect News, adding that the meeting will be held at the company's headquarters in Georgia.

The facility consists of a $500 million revolver and a $400 million term loan A, and while specific price talk is not yet available, it is known that the coupon will be grid based, tied to leverage and ratings.

Rabobank, the underwriter on the deal, is in the process of shopping the deal to top-tier banks.

Proceeds will be used to help fund the acquisition of GSI Holdings Corp. from Centerbridge Partners LP for $940 million and to refinance existing credit lines.

Closing is expected before the end of the year, subject to regulatory approval.

AGCO is a Duluth, Ga.-based manufacturer and distributor of agricultural equipment. GSI is an Assumption, Ill.-based manufacturer of grain storage and protein production systems.

Renaissance allocating soon

Renaissance Learning anticipates finalizing pricing on its oversubscribed $270 million credit facility on Tuesday or Wednesday, and allocations should go out around mid-week, according to a market source.

The credit facility consists of a $20 million revolver (B1/BB-), a $175 million first-lien term loan (B1/BB-) and a $75 million second-lien term loan.

Pricing on the first-lien term loan is expected to firm within talk, which is Libor plus 600 bps to 625 bps with a 1.5% Libor floor and an original issue discount of 96 to 97, and the tranche includes 101 soft call protection for one year. Talk on the second-lien loan has not yet been released.

RBC Capital Markets LLC and BMO Capital Markets Corp. are leading the deal.

Renaissance being acquired

Proceeds from Renaissance Learning's credit facility will be used to help fund its buyout by Permira Funds for $15 per share in cash for shares held by co-founders Terrance and Judith Paul, and $16.60 per share in cash for all other shares. The aggregate purchase price is about $455 million.

Originally, Permira was offering $14.85 per share in cash, or roughly $440 million, but the price was increased after a competing bid emerged from Plato Learning Inc. for $15.50 per share in cash.

In connection with raising the purchase price, Permira increased the equity component of the transaction to $215.8 million from $196.7 million.

Closing is expected in the fourth quarter, subject to shareholder approval, which will be requested at a special meeting on Oct. 17.

Renaissance Learning is a Wisconsin Rapids, Wis.-based provider of technology-based school improvement and student assessment programs for K-12 schools.

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