Arch Coal frees up; Bausch & Lomb launches delayed-draw syndication; Jazz reveals timing

By Sara Rosenberg

New York, May 14 - Arch Coal Inc.'s covenant-light term loan made its way into the secondary market on Monday, with levels quoted above its original issue discount price, and Aeroflex Inc. was lower with amendment chatter.

Over in the primary market, Bausch & Lomb Inc. has decided to move forward with the syndication of its $400 million covenant-light delayed-draw term loan, after wrapping up its funded tranches last week, and Sheridan Production Partners released price talk with launch.

Also, Jazz Pharmaceuticals plc nailed down timing on its credit facility, Univar Inc., Royalty Pharma, Residential Capital LLC and AlixPartners LLP revealed new loan plans, and Town Sports International Holdings Inc. is readying a term loan B repricing.

Arch Coal hits secondary

Arch Coal's $1.4 billion six-year covenant-light senior secured term loan (Ba2/BB/BB) freed up for trading on Monday, with levels quoted by one trader at 99 7/8 bid, par ¼ bid. A second trader saw the loan break at 99¾ bid, par ¼ offered and then move up to par bid, par 3/8 offered.

Pricing on the loan is Libor plus 450 basis points with a 1.25% Libor floor, and it was sold at an original issue discount of 99 after firming recently at the tight end of the 98½ to 99 talk. There is call protection of 102 in year one and 101 in year two, but up to $500 million of asset sales will be allowed to repay the term loan at par within 18 months from closing.

Bank of America Merrill Lynch, PNC Capital Markets LLC, Morgan Stanley Senior Funding Inc., Citigroup Global Markets Inc., RBS Securities Inc., BMO Capital Markets Corp. and Union Bank are leading the deal.

Arch Coal refinancing

Proceeds from Arch Coal's term loan will help fund a tender offer for $450 million of 6¾% senior notes due 2013 at Arch Western Finance LLC, with the offer expiring on May 29, to repay revolver borrowings and to provide additional liquidity for ongoing business needs.

The company has already reached an agreement with lenders on an amendment to its existing senior secured revolver to allow for the new term loan.

And, the amendment would also reduce revolver borrowing capacity to $1 billion in exchange for relief from certain financial covenants over the next two years.

Arch Coal is a St Louis-based coal producer and marketer.

Aeroflex softens

Aeroflex's term loan weakened to 97½ bid, 98½ offered from 98 bid, 98¾ offered as investors were hearing that the company is looking to amend the leverage ratio under its credit agreement, according to a trader.

With the news, Moody's Investors Service lowered the company's speculative grade liquidity rating to SGL-3 from SGL-2.

Aeroflex is a Plainview, N.Y.-based provider of microelectronic components and test and measurement equipment.

Bausch delayed-draw loan

Switching to the primary, Bausch & Lomb has launched its $400 million covenant-light delayed-draw term loan into syndication and is asking lenders to get their commitments in by 5 p.m. ET on Tuesday, a market source said.

Pricing on the loan due Sept. 30, 2015 is Libor plus 375 bps with a 1% Libor floor, and the commitment fee is 100 bps through June 30, 187.5 bps from July 1 through Aug. 15, and 475 bps from Aug. 16 through Oct. 31, the source said.

Earlier, when the Rochester, N.Y.-based eye health company was syndicating the other components of its roughly $3.43 billion credit facility (B1/B+), the delayed-draw loan was upsized from $350 million, pricing firmed at the tight end of the Libor plus 375 bps to 400 bps guidance and the maturity of the delayed-draw loan was shortened from seven years.

Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC, Goldman Sachs & Co. and Bank of America Merrill Lynch are leading the deal.

Bausch facility details

In addition to the delayed-draw loan, Bausch & Lomb's credit facility provides for a $500 million five year revolver, a $1,935,000,000 seven-year covenant-light term loan B and a €460 million seven-year covenant-light term loan B.

Pricing on the U.S. term loan B is Libor plus 425 bps and pricing on the euro loan is Euribor plus 475 bps, with both pieces having a 1% Libor floor and 101 soft call protection for one year. The term loan B's were sold at an original issue discount of 99.

During syndication, which wrapped last week, the U.S. term loan B was downsized from $2,035,000,000 and pricing was increased from talk of Libor plus 375 bps to 400 bps. Also, pricing on the euro B loan was lifted from talk of Euribor plus 400 bps to 425 bps.

Proceeds will fund the purchase of ISTA Pharmaceuticals Inc., an Irvine, Calif.-based prescription eye care business, for $9.10 per share in cash, or a total of about $500 million, and refinance existing debt.

Closing is expected this quarter, subject to regulatory and shareholder approval.

Sheridan sets talk

Sheridan Production Partners held a bank meeting on Monday to launch its $800 million term loan B (B1), and by late day, talk on the loan was announced at Libor plus 400 bps with a 1.25% Libor floor, an original issue discount of 99 and 101 soft call protection for one year, according to a market source.

Citigroup Global Markets Inc., Bank of America Merrill Lynch, BMO Capital Markets Corp., RBS Securities Inc., UBS Securities LLC and Wells Fargo Securities LLC are the lead banks on the deal that will be used to refinance existing debt.

Sheridan Production Partners is a Houston-based oil and gas production company.

Jazz meeting date emerges

Jazz Pharmaceuticals plc came out with timing on its proposed $600 million credit facility, setting a bank meeting for Wednesday morning, according to a market source. Previously, the deal was simply labeled as May business.

The facility consists of a $100 million five-year revolver and a $500 million six-year term loan B, with price talk not yet available, the source said.

Barclays Capital Inc., J.P. Morgan Securities LLC and Citigroup Global Markets Inc. are the lead banks on the deal that will be used with cash on hand to fund the acquisition of EUSA Pharma for $650 million plus a potential $50 million milestone.

Closing is expected in June, subject to customary conditions and regulatory approvals.

Jazz Pharmaceuticals is a Dublin, Ireland-based specialty biopharmaceutical company. EUSA is a specialty pharmaceutical company with headquarters in Langhorne, Pa., and Oxford, England.

Univar readies launch

Univar, a Redmond, Wash.-based chemicals company, will also be launching a deal this week, with the company scheduled to hold a meeting at 2:30 p.m. ET for a $750 million incremental term loan B and an amendment to its existing credit facility, according to a market source.

The incremental loan is expected to be fungible with the existing term loan B, with both pieces maturing on June 30, 2017 and having 101 soft call protection for one year, the source said. Pricing on the existing B loan is Libor plus 350 bps with a 1.5% Libor floor, and it was sold at par back in February 2011.

Proceeds from the new loan will be used to refinance existing debt and fund a dividend, and the amendment to the existing facility is being sought after to allow for the incremental loan, the dividend and the issuance of new senior notes.

Bank of America Merrill Lynch, Goldman Sachs & Co., Deutsche Bank Securities Inc., Morgan Stanley & Co. LLC and Wells Fargo Securities LLC are leading the deal.

Royalty Pharma plans add-on

Meanwhile, Royalty Pharma will be holding a meeting on Thursday morning to launch an add-on to its term loan due in 2018 that will be used to fund the already completed acquisition of an interest in the earn-out payable to the former shareholders of Fumapharm AG for $761 million, according to sources.

The Fumapharm earn-out represents an indirect interest in Biogen Idec's BG-12, an oral therapeutic candidate for the treatment of relapsing-remitting multiple sclerosis, and an interest in Fumaderm, a therapeutic approved in Germany for the treatment of moderate to severe plaque psoriasis.

Bank of America Merrill Lynch, Goldman Sachs & Co. and Citigroup Global Markets Inc. are leading the deal.

Details on the add-on have yet to emerge, but the existing loan is priced at Libor plus 300 bps with a 1% Libor floor, and was sold at an original issue discount of 99½ when done in August 2011.

Royalty Pharma is a New York-based acquirer of royalty interests in marketed and late-stage biopharmaceutical products.

ResCap DIP coming

Continuing on the topic of upcoming deals, Residential Capital (ResCap) will be holding a bank meeting at 9:30 a.m. ET on Thursday to launch a $1.45 billion debtor-in-possession financing facility that is being led by Barclays Capital Inc., according to a market source.

The facility consists of a $200 million revolver, a $1.05 billion term loan A-1 and a $200 million term loan A-2, the source said.

Proceeds will be used to provide liquidity while the company completes contemplated asset sales through its Chapter 11 process that are expected to generate about $4 billion in proceeds.

The company has agreed to sell its mortgage origination and servicing businesses to Nationstar Mortgage LLC, and its legacy portfolio, consisting mainly of mortgage loans and other residual financial assets, to Ally Financial.

Approval of the restructuring plan is targeted by the fourth quarter.

Residential Capital is a New York-based mortgage originator and servicer.

AlixPartners sets meeting

AlixPartners LLP scheduled a bank meeting for 10:30 a.m. ET on Wednesday to launch a proposed $895 million credit facility that will help fund its buyout by CVC Capital Partners from Hellman & Friedman, according to sources.

The facility consists of a $75 million revolver, a $600 million first-lien term loan and a $220 million second-lien term loan, sources said.

Deutsche Bank Securities Inc., Bank of America Merrill Lynch, Goldman Sachs & Co., Jefferies & Co. and UBS Securities LLC are the lead banks on the deal that is expected to close this summer, subject to customary conditions.

AlixPartners is a performance improvement, corporate turnaround and financial advisory services firm.

Town Sports repricing

Town Sports will hold a call on Tuesday to launch a repricing of its $300 million term loan B that is currently priced at Libor plus 550 bps with a 1.5% Libor floor, according to sources.

The term loan B was obtained in May 2011 at an original issue discount price of 99 and included hard call protection of 102 in year one and 101 in year two.

Deutsche Bank Securities Inc. and KeyBanc Capital Markets LLC are the lead banks on the deal.

Town Sports is a New York-based owner and operator of fitness clubs.

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