HCA seesaws with stock repurchase news; PODS talk surfaces; Renaissance readies launch

By Sara Rosenberg

New York, Sept. 15 - HCA Holdings Inc.'s saw some volatility in its term loan B in trading on Thursday as the debt moved a little lower from opening levels on news of a share buyback that will be funded in part with debt, but it then bounced back as the secondary market in general was stronger.

Over in the primary, PODS Enterprises Inc. came out with additional details on the structure of its credit facility as well as price talk, as the transaction was presented to lenders during the session, and Renaissance Learning Inc. firmed up timing on the launch of its buyout deal.

HCA bounces around

HCA's term loan B's took a bit of a rollercoaster ride on Thursday, opening higher in a positive secondary, dipping down immediately after a share repurchase was announced and then rebounding as the overall market tone took center stage, according to traders.

One trader had the term loan B-2 quoted at 94 7/8 bid, 95 5/8 offered on the open and late in the day, but for a short while after the stock buyback news hit, he saw the debt drop to 94¾ bid, 95½ offered. At the close Wednesday, he was quoting the loan at 94½ bid, 95½ offered.

A second trader, meanwhile, was quoting the term B-2 at 95¼ bid, 96 offered, up from 94 5/8 bid, 95 3/8 offered on Wednesday, and the term B-3 at 95 bid, 95¾ offered, up from 94 3/8 bid, 95 1/8 offered.

Under the repurchase agreement, HCA will buy back about 80.77 million shares of its common stock owned by affiliates of Bank of America Corp. at a price of $18.61 per share.

The repurchase transaction is expected to be completed on Sept. 21 using cash on hand and borrowings under available credit facilities.

HCA is a Nashville, Tenn.-based operator of acute care, psychiatric and rehabilitation hospitals.

PODS details emerge

Moving to the primary, PODS Enterprises held a bank meeting on Thursday to kick off syndication on its proposed $225 million credit facility, and with the event, specifics on tranching and price talk were announced, according to a market source.

The deal was launched as a $25 million revolver, a $154 million term loan and a $46 million delayed-draw for six months term loan, the source said. By comparison, prior to the meeting, the term loan was said to be a total of $198 million, with the breakdown of funded and delayed-draw debt unavailable.

Price talk on all tranches is Libor plus 600 basis points with a 1.5% Libor floor and an original issue discount of 981/2, and the delayed-draw loan includes a 100 bps unused fee, the source continued.

GE Capital Markets is the lead bank on the deal and is asking for commitments by Sept. 29.

PODS, a Clearwater, Fla.-based provider of portable on-demand storage and moving products and services, will use proceeds from the credit facility for acquisition funding and to refinance existing debt.

Renaissance reveals timing

Renaissance Learning nailed down timing on the launch of its proposed $270 million credit facility with the scheduling of a bank meeting for Wednesday afternoon, according to a market source.

As was previously reported, the facility consists of a $20 million revolver, a $175 million first-lien term loan and a $75 million second-lien term loan.

RBC Capital Markets LLC and BMO Capital Markets Corp. are the joint lead arrangers with RBC the bookrunner on the deal that will be used, along with up to $196.7 million of equity, to fund the buyout of the company by Permira Funds for $14.85 per share in cash, or roughly $440 million.

Closing is expected in the fourth quarter, subject to customary conditions, including shareholder approval and clearance under the Hart-Scott-Rodino Act. It is not subject to financing.

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

Metropolitan nets interest

In other news, chatter is that Metropolitan Health Networks Inc.'s recently relaunched $355 million credit facility has been going well in the few days it has been back in active syndication and that early feedback is encouraging, a market source told Prospect News.

The deal consists of a $40 million revolver talked at Libor plus 500 bps with a 1.5% Libor floor and an original issue discount of 99, compared to plans at the original Aug. 3 launch for a $25 million revolver talked at Libor plus 475 bps with a 1.5% floor.

As before, there is a $240 million first-lien term loan, but talk on this tranche is now Libor plus 550 bps with a 1.5% Libor floor and an original issue discount of 981/2, compared to Libor plus 475 bps with a 1.5% Libor floor and a discount of 99 originally.

And lastly, the facility provides for a $75 million second-lien term loan talked at Libor plus 1,175 bps with a 1.75% floor and a discount of 98, whereas under the original structure, it was a $90 million second-lien term loan talked at Libor plus 900 bps with a 1.75% floor and a discount of 98.

Metropolitan lead banks

GE Capital Markets Inc. and SunTrust Robinson Humphrey Inc. are the lead banks on the Metropolitan Health's credit facility.

Proceeds will be used, along with cash and investments, to fund the acquisition of Continucare Corp. for $6.25 in cash and 0.0414 of a share of Metropolitan common stock per share. The transaction is valued at about $416 million and is expected to close by the end of this month.

The revised tranching was announced last week when word of the relaunch hit the market, and price talk hit the market when the relaunch took place this past Monday.

Sources previously explained that the relaunch was needed since the deal got lost in August amidst all the market volatility.

Metropolitan Health is a Boca Raton, Fla.-based health care organization. Continucare is a Miami-based provider of primary care physician services on an outpatient basis.

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