Reynolds breaks; DaVita details emerge; Grifols, Nalco, Aspen tweak deals; TriZetto overfills

By Sara Rosenberg

New York, Sep. 28 - Reynolds Group Holdings Ltd.'s new bank debt freed up for trading on Tuesday, with the term loan D quoted above par, and Qualitest Pharmaceuticals' first- and second-lien term loans popped higher on news that the company is being acquired by Endo Pharmaceuticals Holdings Inc.

Over in the primary market, DaVita Inc. came out with the timing, size and structure on its proposed credit facility, Grifols lowered the spread and discount on its term loan B, Nalco Co. cut pricing on its term loan B-1, and Aspen Dental moved to a single tranche term loan from a first-out, last-out structure and revised pricing as a result.

Also, TriZetto Group Inc.'s incremental term loan has already more than filled out, resulting in the cancellation of the conference call launch that was set for Wednesday.

Furthermore, CHG Healthcare Services' first-lien term loan was oversubscribed and its second-lien loan was basically done ahead of its commitment deadline, and price talk on HealthSouth Corp.'s revolving credit facility surfaced.

Reynolds starts trading

Reynolds' new bank debt hit the secondary market, with the $1.52 billion term loan D quoted on the break by one trader at par ¼ bid, par ¾ offered and by a second trader at par bid, par ¾ offered. The first trader then saw the loan move to par ½ bid, par ¾ offered, and the second trader saw it go to par ¼ bid, par 5/8 offered.

Pricing on the term loan D is Libor plus 475 basis points, with a 1.75% Libor floor, and it was sold at an original issue discount of 99. There is 101 soft call protection for one year.

During syndication, the term loan D was upsized from $1 billion, pricing was reduced from Libor plus 500 bps, the Libor floor was cut from 2% and the discount was tightened from 98.

The company's $2.02 billion in new loans (Ba3/BB) also includes a $500 million term loan A priced at Libor plus 450 bps, with a 1.75% Libor floor, which was reduced from 2% last week. The tranche was sold at a discount of 99.

Reynolds acquiring Pactiv

Proceeds from Reynolds' term loans, along with notes that were downsized as a result of the term loan D upsizing, will be used to help fund the acquisition of Pactiv Corp.

Under the agreement, Pactiv shareholders will receive $33.25 in cash per share for a total purchase price of $4.6 billion. However, the transaction is valued at $6 billion.

Closing is targeted by the end of this year, subject to Pactiv shareholder approval, regulatory approvals and customary conditions. The acquisition is not conditioned on the receipt of equity or debt financing.

Credit Suisse, HSBC and Australia and New Zealand Banking Group are the lead banks on the credit facility.

Reynolds is a Chicago-based manufacturer and supplier of consumer food and beverage packaging and storage products. Pactiv is a Lake Forest, Ill.-based consumer and foodservice/food packaging company.

Qualitest rises with buyout

Qualitest Pharmaceuticals' first- and second-lien term loans were both higher on Tuesday as the debt will be repaid in connection with the company's acquisition by Endo Pharmaceuticals, according to a trader.

Both term loans were quoted at 99 bid, par offered, the trader said. Prior to the news, the Huntsville, Ala.-based generics company's first-lien term loan was at 94 bid, 95 offered, and the second-lien term loan was at 92 bid, 93 offered.

Endo, a Chadds Ford, Pa.-based specialty health care services company, is buying Qualitest from Apax Partners for $1.2 billion in cash.

The acquisition will be funded with a new $400 million term loan led by JPMorgan and RBC, borrowings under the Endo's existing $300 million revolver and $500 million in cash on hand.

Closing on the acquisition is expected late in the fourth quarter of 2010 or early in the first quarter of 2011, subject to regulatory approval.

DaVita timing, structure

Moving to the primary, DaVita has scheduled a bank meeting for Friday morning to kick off syndication on its proposed secured credit facility that is going to be sized at $3 billion, according to a market source.

Tranching on the facility is split between a $250 million five-year revolver, a $1 billion five-year term loan A and a $1.75 six-year term loan B, the source said, adding that price talk is not yet available.

JPMorgan, Bank of America and Credit Suisse are the lead banks on the deal that will be used, along with new unsecured debt, to refinance the company's $1.8 billion of outstanding bank debt, $700 million of its 6 5/8% senior notes due 2013 and $850 million of its senior subordinated notes due 2015.

The new debt financing will also be used for general corporate purposes and other opportunities, including potential acquisitions, share repurchases and other growth investments.

DaVita is a Denver-based provider of dialysis services.

Grifols modifies pricing

Grifols reverse flexed pricing on its $1.6 billion term loan B to Libor plus 425 bps from Libor plus 450 bps on the dollar tranche and Euribor plus 450 bps from Euribor plus 475 bps on the euro tranche, and trimmed the original issue discount on the entire loan to 99 from 981/2, according to a market source.

Also, 101 soft call protection for one year was added to the B loan, while the 1.75% Libor floor was left unchanged.

Of the total term loan B amount, about $300 million is being targeted to be raised in euros.

The company's $3.4 billion credit facility (Ba3/BB) also includes a $1.5 billion term loan A priced at Libor plus 375 bps/Euribor plus 400 bps and a $300 million revolver.

Initially, the term loan B was expected to be sized at $2.35 billion, and the term loan A was expected at $750 million, but funds were shifted between the tranches as a result of strong demand from banks during the pro rata syndication.

Grifols shuts books

Following the changes, Grifols gave lenders until the end of the day Tuesday to recommit to the oversubscribed term loan B.

Allocations are expected to go out later this week.

Deutsche Bank, Nomura, BBVA, BNP Paribas, HSBC and Morgan Stanley are the lead banks on the deal.

In addition to the credit facility, the company is planning $1.1 billion of notes backed by a bridge loan commitment.

At close, the company's initial net debt to EBITDA ratio is expected to be roughly 5.0 times.

Grifols buying Talecris

Proceeds from Grifols' credit facility and notes will be used to help fund the acquisition of Talecris Biotherapeutics Holdings Corp.

Under the agreement, Grifols is buying Talecris for a combination of cash and newly issued Grifols non-voting shares having an aggregate value of $3.4 billion. The enterprise value of the transaction is $4 billion if Talecris' debt is included.

Specifically, Grifols is paying $19.00 per share in cash and 0.641 in newly issued non-voting shares for each Talecris share. The cash portion of the consideration is $2.5 billion.

Closing is expected to take place in the second half of the year, subject to customary conditions, including antitrust and regulatory review and the approval of each company's shareholders.

Grifols is a Spain-based health care company and producer of plasma protein therapies. Talecris is a Research Triangle Park, N.C.-based biotherapeutics products company.

Nalco lowers spread

Nalco cut pricing on its $650 million term loan B-1 to Libor plus 300 bps from Libor plus 325 bps and added a step-down to Libor plus 275 bps when corporate ratings are Ba1/BB+, according to a market source.

As before, the term loan B-1 has a 1.5% Libor floor and is being offered at an original issue discount of 991/2. There is 101 soft call protection for one year.

Meanwhile, pricing on the company's $100 million term loan C-1 was left unchanged at Libor plus 175 bps with an original issue discount of 951/2.

Deutsche Bank is the lead bank on the $750 million of new term loans (BB+) that will be used to refinance existing term loan debt.

Nalco is a Naperville, Ill.-based manufacturer and seller of specialized service chemical programs.

Aspen Dental retranches

Aspen Dental revised its credit facility on Tuesday so that it is now getting one $195 million six-year term loan, as opposed to a $150 million first-out term loan (B1) and a $45 million six-year last-out term loan (Caa1) , according to a market source.

Pricing on the first-lien term loan is Libor plus 600 bps, with a 1.7% Libor floor and an original issue discount of 98, the source said.

By comparison, under the initial plans, the first-out term loan was talked at Libor plus 500 bps to 525 bps, and the last-out term loan was talked at Libor plus 725 bps to 775 bps, with both tranches having a 1.75% Libor floor and an original issue discount of 98.

Aspen funding buyout

Proceeds from Aspen Dental's credit facility will be used to help fund the buyout of the company by Leonard Green & Partners LP.

As before, the $230 million deal also includes a $35 million five-year revolver (B1).

UBS and Jefferies are the lead banks on the deal, with UBS the left lead.

Recommitments towards the restructured facility are due by mid-day on Wednesday.

Aspen Dental is a provider of denture and dental care services.

TriZetto well met

TriZetto's $100 million incremental term loan (B1) is oversubscribed by existing lenders and, therefore, the conference call launch that was set for Wednesday will no longer be taking place, according to a market source.

Final pricing on the loan will not be available until later this week, but it is expected to come in the Libor plus low-400 bps area, with a typical Libor floor and a tight original issue discount, the source said.

RBC Capital Markets is the lead bank on the deal that will be used, along with cash on hand, to repay all of the company's $192 million of mezzanine notes, which would bring the capital structure to all senior debt.

Pro forma leverage for the transaction is 3.2 times.

TriZetto amendment passes

In order the get the new term loan and allow for the mezzanine repayment, TriZetto had to get an amendment to its existing credit facility and this amendment was approved ahead of Tuesday's consent deadline, the source remarked.

Lenders were offered a 12.5 bps amendment fee.

On the Sept. 21 amendment call, the company discussed the incremental term loan with its existing lenders, which is how the deal ended up filling out before its official launch.

TriZetto is a Greenwood Village, Colo.-based health care information technology company to the health care payer industry.

CHG fills out

CHG Healthcare Services' $225 million first-lien term loan was oversubscribed and its $60 million second-lien term loan was pretty much fully subscribed by the morning, with lenders still having a few hours to get their orders in before the books closed at the end of the day Tuesday, according to a market source.

The first-lien term loan is being talked at Libor plus 500 bps to 550 bps, with a 1.75% Libor floor, an original issue discount of 98 and 101 soft call protection for one year, and the second-lien term loan is being talked at Libor plus 900 bps to 950 bps, with a 1.75% Libor floor, and a discount and call protection that is still to be determined.

Final pricing on the first- and second-lien and discount and call protection on the second-lien are expected to be available later this week.

Pricing on the two tranches is expected to firm within the initial talk, although it is unclear whether it will come at the tight end or the wide end, the source added.

CHG getting revolver

CHG Healthcare Services' $355 million credit facility also includes a $70 million revolver that is talked at Libor plus 500 bps to 550 bps, with a 1.75% Libor floor, and is being offered with upfront fees.

Pricing on the revolver is also expected to finalize within the initial talk.

Barclays, Bank of America and Goldman Sachs are the lead banks on the deal, with Barclays the left lead.

Proceeds will be used to repay debt and fund a dividend.

The company is expected to get high single-B corporate ratings, and leverage is 3.5 times through the first lien and just under 4.5 times total.

CHG Healthcare Services is a Salt Lake City-based health care staffing provider.

HealthSouth floats talk

HealthSouth is talking its proposed $500 million five-year senior secured revolving credit facility (Ba1/BB) at Libor plus 350 bps, although the spread will later be able to fluctuate based on a grid, according to a market source.

Barclays Capital, Citigroup, Bank of America, Goldman Sachs and Morgan Stanley are the lead banks on the deal that launched with a bank meeting last Thursday, and have committed to provide $350 million of the facility.

Lenders are being offered upfront fees based on commitment size and have been told to get their orders in by Oct. 8.

Proceeds from the revolver, along with $525 million of senior notes, will be used to repay all of the company's term loan debt and replace the existing revolver and for ongoing working capital requirements.

HealthSouth is a Birmingham, Ala.-based provider of inpatient rehabilitative healthcare services.

Valeant closes

Valeant Pharmaceuticals International Inc. completed its merger with Biovail Corp. on Tuesday, according to a news release.

To help fund the merger and refinance existing debt, Valeant got a new $1.75 billion credit facility consisting of a $125 million revolver, a $1 billion term loan A and a $625 million term loan B, of which $125 million is delayed-draw and will be used to fund a one-time dividend.

Pricing on the revolver, term loan A, term loan B and delayed-draw is Libor plus 400 bps.

The term loan B has a 1.5% Libor floor and was sold at an original issue discount of 99, and the delayed-draw loan has an undrawn fee of 75 bps.

Valeant lead banks

Goldman Sachs, Morgan Stanley and Jefferies acted as the joint lead arrangers and joint bookrunners on Valeant's credit facility, with Goldman the administrative agent and the left lead.

During syndication, the revolver was downsized from $250 million, the term loan A was upsized from $750 million, and the term loan B was downsized from $875 million, of which $150 million was delayed-draw.

Also, price talk on the term loan B was initially Libor plus 400 bps to 425 bps, with a 1.75% Libor floor and an original issue discount of 981/2, and the revolver and term loan A were initially talked at Libor plus 375 bps to 400 bps.

Aliso Viejo, Calif.-based Valeant and Mississauga, Ont.-based Biovail are specialty pharmaceutical companies. The combined company is based in Mississauga.

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