Rite Aid, KIK set talk; NuVox flex rumored; Swift, GateHouse break; OSI dips as vote delayed

By Sara Rosenberg

New York, May 8 - Rite Aid Corp. came out with price talk on its billion dollar plus term loan as the deal was launched with a bank meeting during Tuesday's market hours, KIK Custom Products released official talk on its deal now that ratings have surfaced and NuVox Communications is rumored to be considering a reverse flex in pricing due to strong demand.

Meanwhile, in secondary news, Swift Transportation Co. Inc.'s credit facility freed for trading, with the term loan B ending the day wrapped around par, and GateHouse Media Inc.'s term loan broke as well, with levels seen atop par.

Also in trading, OSI Restaurant Partners Inc.'s term loan was a touch softer as the company delayed its shareholder vote to try to solicit more yeses.

Rite Aid held a bank meeting on Tuesday to kick off syndication on its proposed term loan, and in connection with the launch, price talk on the transaction emerged, according to a market source.

The $1.105 billion seven-year senior secured term loan is being talked at Libor plus 175 basis points, the source said.

Citigroup is the lead bank on the deal.

Proceeds will be used to help fund the acquisition of Jean Coutu Group USA Inc. from Longueuil, Quebec-based Jean Coutu Group Inc.

The acquisition, which is expected to close by the end of May, includes about 1,850 Brooks and Eckerd stores and six distribution centers, primarily located on the East Coast and in the Mid-Atlantic states.

Rite Aid is a Camp Hill, Pa., national drugstore chain.

KIK details price talk

KIK Custom Products set official price talk on its proposed credit facility now that ratings from both Moody's Investors Service and Standard & Poor's have been announced, according to a market source.

The $400 million first-lien term loan (Ba3/B-) is being talked at Libor plus 250 bps, while the $240 million second-lien term loan (Caa1/CCC) is being talked at Libor plus 500 bps, the source said.

The second-lien term loan is non-callable for one year, then at 102 in year two and 101 in year three, the source added.

KIK Custom Products' $695 million credit facility also includes a $55 million revolver (Ba3/B-).

JPMorgan, Credit Suisse and UBS are the lead banks on the deal that will be used to help fund Caxton-Iseman Capital, Inc.'s acquisition of KCP Income Fund for C$804 million.

Concord, Ont.-based KCP, through its operating subsidiaries KIK Holdco Co. and KIK Operating Partnership, is a manufacturer of consumer products in the laundry, household cleaners, personal care, over-the-counter medicated and pharmaceutical categories.

NuVox contemplating flex

Market speculation is that NuVox is potentially going to lower pricing on its $250 million seven-year term loan based on the positive investor reception that the deal has received, according to a market source.

Currently, the term loan is being talked at Libor plus 375 bps.

NuVox's $260 million credit facility (B2/B-) also includes a $10 million six-year revolver.

Goldman Sachs and Wachovia are the lead banks on the deal.

Proceeds will be used to help fund the merger of NuVox and FDN Communications and to refinance both companies' existing senior credit facilities.

The combined company will have headquarters in Greenville, S.C., will operate under the name NuVox Communications and will provide IP-based communications services, including voice, data connectivity and storage, private networking, web hosting and security services to business customers across the Southeast and the Midwest.

Smart & Final tweaks deal

Smart & Final Inc. made some more changes to its credit facility, including shifting some funds between the first- and second-lien term loans, firming up first-lien pricing at the wide end of revised talk, and increasing second-lien pricing and revising call premiums on the tranche, according to a market source.

The seven-year covenant-light funded first-lien term loan (B1/B) is now sized at $235 million, up from $200 million, and pricing was set at Libor plus 300 bps, the high end of revised talk of 275 bps to 300 bps, and wider than the initial talk at launch of Libor plus 225 bps to 250 bps, the source said.

On the flip side, the 71/2-year second-lien PIK toggle term loan (B3/CCC) is now sized at $140 million, down from $175 million, pricing was flexed up to Libor plus 675 bps cash pay from revised guidance of Libor plus 600 bps to 625 bps and initial talk at launch of Libor plus 575 bps, and call premiums were changed to non-callable for one year then at 101 in year two from 102 in year one and 101 in year two, the source continued.

On the second-lien loan, if PIK is elected, pricing will be 75 bps higher than the cash pay rate. So, the new PIK pricing is Libor plus 750 bps, up from revised talk of Libor plus 675 bps to 700 bps and initial talk of Libor plus 650 bps.

In addition, pricing on the $160 million seven-year covenant-light delayed-draw first-lien term loan (B1/B) also finalized at Libor plus 300 bps, the high end of revised talk of 275 bps to 300 bps, and wider than the initial talk at launch of Libor plus 225 bps to 250 bps, the source remarked.

Smart & Final's $685 million credit facility also includes a $150 million six-year asset-based revolver (Ba1) priced at Libor plus 150 bps with a 25 bps commitment fee.

Credit Suisse, Bank of America and Bear Stearns are the joint lead arrangers and joint bookrunners on the deal.

Proceeds will be used to help fund the leveraged buyout of the company by Apollo Management, LP for $22 per share in cash. The estimated total enterprise value of the transaction, including the value of the company's existing debt obligations, net of cash, at Dec. 31 is $812.9 million.

Apollo has also entered into a stock purchase agreement with Paris-based Casino Guichard-Perrachon, SA, which owns about 55% of Smart & Final's common stock, to purchase the subsidiary of Groupe Casino, which directly owns 52.2% of Smart & Final's common stock. This transaction is conditioned on the concurrent closing of the Smart & Final leveraged buyout.

Smart & Final is a City of Commerce, Calif., operator of non-membership warehouse stores for food and foodservice supplies.

Swift frees to trade

Moving to the secondary, Swift Transportation's credit facility allocated and broke for trading on Tuesday afternoon, with the term loan B debt quoted at par bid, par 3/8 offered on the open and then moving down to 99 7/8 bid, par 1/8 offered, where it closed the day, according to traders.

The $1.72 billion seven-year term loan B is priced at Libor plus 300 bps.

During syndication, pricing on the term loan B was flexed up from original talk at launch of Libor plus 250 bps to 275 bps.

Swift's $2.17 billion senior secured credit facility (B1/B+) also includes a $250 million five-year revolver priced at Libor plus 300 bps and a $200 million letter-of-credit facility priced at Libor plus 300 bps.

During syndication, the revolver was downsized from $450 million and pricing was increased from original talk of Libor plus 250 bps to 275 bps, and the letter-of-credit facility was added to the capital structure.

Morgan Stanley, Wachovia and JPMorgan are joint lead arrangers and joint bookrunners on the Phoenix truckload carrier's deal, with Morgan Stanley the left lead.

Proceeds will be used to help fund the buyout of Swift by Jerry Moyes, the company's largest shareholder, a current director and former chairman of the board and chief executive officer.

Under the acquisition agreement, Moyes and some of his family members will acquire Swift in an all-cash transaction valued at $2.74 billion, including the assumption of about $332 million of net debt. Swift stockholders will receive $31.55 in cash per share.

Other acquisition financing is coming from $835 million of second-lien senior secured floating- and fixed-rate notes.

Based on adjusted EBITDA of $462 million for the last 12 months ended March 31, first-lien term loan B leverage is 3.7 times and total leverage is 5.5 times.

GateHouse breaks

Also hitting the secondary on Tuesday was GateHouse Media's $275 million term loan, with levels quoted at par 1/8 bid, par 3/8 offered, according to a trader.

The term loan is priced at Libor plus 225 bps, the high end of original price talk at launch of Libor plus 200 bps to 225 bps.

Proceeds from the add-on were to be used to help fund the recently completed acquisition of four daily newspapers from Gannett Co., Inc. for $410 million.

In connection with this deal, GateHouse's existing term loan was repriced to Libor plus 200 bps from Libor plus 175 bps.

Wachovia, Goldman Sachs and Morgan Stanley acted the lead banks on the term loan, with Wachovia the left lead.

GateHouse is a Fairport, N.Y., publisher of locally based print and online media.

OSI lower on vote delay

OSI Restaurant's term loan was down by about an eighth of a point on Tuesday as the company announced the postponement of its special meeting of stockholders regarding its leveraged buyout by an investor group comprised of Bain Capital Partners, LLC, Catterton Partners and company founders Chris T. Sullivan, Robert D. Basham and J. Timothy Gannon, according to a trader.

The term loan ended the day at par ¾ bid, 101 offered, down from par 7/8 bid, 101 1/8 offered, the trader said.

The stockholder meeting was moved to May 15 from May 8 to give the company more time to solicit additional votes in favor of the LBO.

"It didn't go through so they have to extend the deadline to try to get them to vote yes," the trader said.

"They cancelled their $550 million note issue."

"I would assume the loan will just get torn up if the deal doesn't go through. You're not really taken out at par, just torn up," the trader added.

The $1.23 billion seven-year term loan freed for trading last Friday at 101 bid, 101¼ offered.

The term loan is priced at Libor plus 225 bps with a step down to Libor plus 200 bps upon achieving B1 corporate ratings or better.

OSI's $1.48 billion senior secured credit facility (Ba3/BB-) also includes a $150 million six-year revolver that is priced at Libor plus 250 bps and a $100 million six-year pre-funded revolver that is priced at Libor plus 225 bps with a step down to Libor plus 200 bps upon achieving B1 corporate ratings or better.

Deutsche Bank and Bank of America are the lead banks on the deal, with Deutsche the left lead.

OSI is a Tampa, Fla., casual dining restaurant company with a portfolio of brands, including Outback Steakhouse, Carrabba's Italian Grill, Bonefish Grill, Fleming's Prime Steakhouse & Wine Bar, Roy's, Lee Roy Selmon's, Blue Coral Seafood & Spirits and Cheeseburger in Paradise.

Oxbow closes

Oxbow Carbon and Minerals Holdings, Inc. completed its acquisition of Great Lakes Carbon Income Fund for about C$14.00 per trust unit, for a total purchase price of about C$527 million, according to a news release.

To help fund the transaction, Oxbow got a new $1.11 billion credit facility (B1/B+) consisting of a $960 million term loan priced at Libor plus 200 bps and a $150 million revolver.

During syndication, pricing on the term loan was reverse flexed from original talk at launch of Libor plus 225 bps to 250 bps.

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

Oxbow is a West Palm Beach, Fla., private energy company.

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