Rite Aid firms pricing, breaks for trading; Dollar Thrifty, GM slide; Applica Pet sets talk

By Sara Rosenberg

New York, July 1 - Rite Aid Corp. finalized pricing on its new term loan wide of original guidance, and allocated and freed the deal up for trading, with levels seen north of the revised original issue discount.

Also in trading, Dollar Thrifty Automotive Group Inc.'s term loan B headed lower after the company warned that it will miss its previously issued earnings guidance, General Motors Corp.'s term loan was softer on June sales results, while Ford Motors Co.'s term loan was surprisingly steady, and LCDX 10 was down.

In other news, Applica Pet Products LLC came out with price talk on its credit facility being that the deal was presented to lenders during the Tuesday session and Hologic Inc.'s credit facility is fully syndicated as the commitment deadline is nearing.

Rite Aid increased the spread and the original issue discount on its $350 million senior secured tranche 3 term loan due June 4, 2014 (Ba3/BB-/BB-) and then broke the deal for trading, according to a market source.

The term loan ended up with pricing of Libor plus 300 basis points, up from Libor plus 225 bps, and the original issue discount firmed at 90, up from the 94 level that was announced at launch, the source said.

The 3% Libor floor that the loan was launched with was left unchanged, the source continued.

After pricing finalized, allocations went out and the loan hit the secondary market with levels quoted at 90½ bid, 91½ offered, the source remarked.

Then, in trading, levels on the term loan tightened up as the bid side crept up to 90¾ bid, and the offer side came in to 91¼ offered, the source added.

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

Proceeds will be used to help fund the previously announced offers to purchase as well as the consent solicitations related to the company's $360 million of 8 1/8% senior secured notes due 2010, $200 million of 7½% senior secured notes due 2015 and $150 million of 9¼% senior notes due 2013.

Other financing for the tender offers is coming from a bond offering. On Monday, Rite Aid priced $470 million of 10 3/8% eight-year senior secured second-lien notes at 90.588 to yield 12¼%. The bonds generated $425.76 million of proceeds.

Rite Aid is a Camp Hill, Pa.-based drugstore chain.

Dollar Thrifty falls

Dollar Thrifty's term loan lost some ground on the back of news that second-quarter results fell short and that full-year results will as well, according to a trader.

The term loan B was seen offered at 80, down from Monday's offer price of 851/2, the trader said, adding that he was just seeing offers on the debt, not bids.

On Tuesday, Dollar Thrifty said that its second quarter was below expectations with challenges primarily in the areas of revenue per day and vehicle depreciation costs.

The company also said that the balance of the year looks worse than previously forecasted as a result of overall economic trends.

As a result, the company does not expect to meet the previously issued guidance for full year non-GAAP earnings per share of $1.00 to $1.50 and corporate EBITDA of $97 million to $115 million.

Based on the company's present forecast, it still expects to remain profitable on a non-GAAP basis, with a minimum of $50 million in corporate EBITDA for the year.

"We believe overall fleet capacity has come down in the industry going into the summer travel season, reacting to the anticipated decline in industry wide demand. We believe this may help support pricing in the third quarter, but it is extremely difficult in the current environment to accurately forecast any more than the shortest term outlook," said Gary L. Paxton, president and chief executive officer, in a news release.

"Our focus in this tough operating environment is on executing our strategy to achieve improvements in revenue diversification, fleet utilization, productivity and cost control," Paxton added in the release.

More details on the company's financial performance will be provided when results for the second quarter are released on Aug. 5.

Dollar Thrifty is a Tulsa, Okla.-based vehicle rental company.

General Motors dips on sales

General Motors' term loan traded off on Tuesday after the company released June numbers that showed a decline in sales on a year-over-year basis, according to a trader.

The term loan was quoted at 82 bid, 83 offered, down about a point and a half from previous levels, the trader said.

For the month of June, General Motors' total vehicle sales were 265,937, down 18.5% on an unadjusted basis and 8.3% on an adjusted basis from 326,300 last year.

Total truck sales for June were 156,713, down 16.6% on an unadjusted basis and 6.2% on an adjusted basis from 187,949 last year.

"We're doing all we can to meet customer demand for our popular crossovers and cars, including increasing overtime or adding Saturday shifts at the plants where we build the Malibu, Aura, G6, Enclave, Outlook, Acadia and our full-size vans," said Mark LaNeve, vice president, GM North America vehicle sales, service and marketing, in a news release.

"Hybrid demand and availability continues to build, and we're seeing really positive momentum with the Chevrolet Tahoe and GMC Yukon 2-mode hybrids. While the truck market continues to be impacted by the sudden rise in fuel prices, our offerings from Chevrolet, GMC and Cadillac continue to lead their respective segments in fuel economy and that is a decided advantage for those shopping for those vehicles. We expect our market share performance to be very strong compared with April and May," LaNeve added in the release.

General Motors is a Detroit-based automotive company.

Ford holds steady

In a somewhat unexpected move, Ford's term loan remained unchanged on the day even though it, too, put out numbers that showed a drop in sales, according to a trader.

The term loan was quoted at 81 bid, 82 offered, in line with Monday's levels, the trader said, adding that "you would think it would have been down."

In June, the company's total vehicle sales dropped to 167,090, down 28.1% from 232,457 in June of 2007.

Total truck sales for the month were 101,981 vehicles, down 35.6% from 158,361 last year, with SUVs dropping 54.7% to 12,664 vehicles from 27,946, trucks, and vans dropping 37.8% to 55,411 units from 89,153 units, and crossover utility vehicles dropping 17.8% to 33,906 vehicles from 41,262 vehicles.

For the first half of the year, total vehicle sales fell 14.3% to about 1.1 million from about 1.3 million vehicles.

Total trucks sales for the first half of the year were 708,615 vehicles, down 18.2% from 866,626 vehicles, with SUVs down 34.4% to 98,708 from 150,564, trucks and vans down 22% to 396,850 units from 508,764 units and crossover utility vehicles up 2.8% to 213,057 from 207,298.

According to Ford, the deterioration in SUV and truck sales was accelerated during the first half of the year as gasoline prices increased a dollar from $3 to $4 a gallon.

Together, cars and crossovers accounted for 59% of Ford's first half retail sales compared with 49% in the first half 2007.

"In the first half, Ford outperformed the industry in both the car and crossover segments," said Jim Farley, Ford group vice president, marketing and communications, in a news release. "This performance is crucial to creating an exciting viable Ford delivering profitable growth for all.

"Consumer fundamentals and consumer confidence deteriorated as the first half unfolded," Farley continued. "The economy enters the second half of the year with a notable absence of momentum and a high degree of uncertainty.

"Clearly, the rapid rise in gasoline prices, and the resulting shift toward fuel efficient vehicles, has been challenging, but it also provides an opportunity. In addition to adjusting our capacity and production plans to produce more cars and crossovers, we are introducing several new vehicles with class-leading fuel economy," Farley added in the release.

Ford is a Dearborn, Mich.-based automotive company.

LCDX weakens

In more trading news, LCDX 10 saw levels come in a bit during market hours, while the cash market in general was probably unchanged on the day, and there was a lot of activity seen in both, according to a trader.

The index was quoted at 96.90 bid, 97.10 offered, down from Monday's levels of 97.20 bid, 97.30 offered, the trader said.

As for cash, the "market felt pretty firm except for some specific names," the trader added.

Applica talk surfaces

Back over in the primary, Applica Pet Products held a bank meeting on Tuesday morning to kick off syndication on its proposed $325 million credit facility (B1/BB), and in connection with the launch, price talk was announced, according to a market source.

Both the $25 million revolver and the $300 million term loan were launched with talk of Libor plus 500 bps, the source said.

The term loan has a 3.25% Libor floor and is being offered to investors at an original issue discount of 98, the source added.

Credit Suisse and GE Capital are the lead banks on the deal, with Credit Suisse the left lead.

Proceeds will be used to help fund Salton Inc.'s acquisition of United Pet Group from Spectrum Brands Inc. Applica Pet will function as the acquisition subsidiary for United Pet Group and is a wholly owned subsidiary of Salton.

The transaction has hit a bit of a snag as Spectrum Brands revealed on Monday that it was unable to obtain the consent of its senior lenders for the sale of the pet business, which is a condition to the completion of the sale.

However, Spectrum Brands went on to say that the definitive purchase agreement continues in full force and effect, and that it intends to comply with its obligations thereunder in order to satisfy the conditions necessary to close the sale.

Spectrum Brands also said that it continues to believe that the sale of its global pet business upon the negotiated terms is in the best interests of the company and its shareholders, as well as its other constituencies.

The company declined to comment any further on Monday as to how it would get around the lender consent issue.

Proceeds from the sale of the business are expected to be used by Spectrum Brands to repay a portion of the borrowings outstanding under its ABL credit facility along with other senior bank debt.

Salton is buying the business for $692.5 million in cash, plus additional consideration in the form of $98 million of Spectrum's variable-rate toggle senior subordinated notes due 2013 and $124.5 million of Spectrum's senior subordinated notes due Feb. 1, 2015, in each case taking into account the principal amount and any accrued interest.

Other acquisition financing will come from equity provided by Harbinger Capital Partners, Salton's controlling stockholder.

As part of the investment, Harbinger Capital Partners will contribute the Spectrum Brands notes to Salton.

For the last 12 months ended March 30, the pet business had adjusted EBITDA of $90.3 million, net sales of $573.7 million and gross profit of $243 million, according to an 8-K filed with the Securities and Exchange Commission Tuesday.

United Pet Group, which markets and manufactures pet supplies for fish, dogs, cats, birds and other small domestic animals, will operate as a standalone business following the acquisition.

Spectrum Brands is an Atlanta-based manufacturer and marketer of consumer batteries, pet supplies, electric shaving and grooming, electric personal care and portable lighting products. Salton is a Miramar, Fla.-based marketer and distributor of small household appliances.

Hologic fills out

Hologic's $800 million credit facility was oversubscribed ahead of Wednesday's commitment deadline, according to a market source.

Allocations on the deal are expected to go out early next week, the source added.

The facility consists of a $200 million revolver talked at Libor plus 250 bps, a $450 million term loan A talked at Libor plus 250 bps and a $150 million term loan B talked at Libor plus 325 bps.

The upfront fee on the term loan A is 1 bps per $1 million.

On the term loan B, lenders are being offered an original issue discount of 99.

The structure on the deal as outlined by the credit facility commitment letter was slightly different, with the entire $600 million of term loan debt said to be a term loan A tranche with initial pricing on it and the revolver expected at Libor plus 275 bps.

The company, however, said in a filing with the SEC that the term loan A was expected to carry pricing in the area of Libor plus 250 bps to 275 bps with a potential for some modest upfront fee.

Goldman Sachs is the lead arranger and bookrunner on the deal that will be used to help fund the acquisition of Third Wave Technologies Inc. for $11.25 per share, or about $580 million.

Hologic is a Bedford, Mass.-based developer, manufacturer and supplier of diagnostics, medical imaging systems and surgical products dedicated to serving the health care needs of women. Third Wave is a Madison, Wis.-based provider of DNA and RNA analysis products to clinical, research and agricultural customers.

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