Creative Artists, Varsity Brands break; Sage, Royalty Pharma, Siemens Audiology update deals

By Sara Rosenberg

New York, Dec. 10 – Creative Artists Agency extended the call protection on its term loan B and then the tweaked loan made its way into the secondary market on Wednesday to trade above its original issue discount, and Varsity Brands Inc. freed up as well.

Back in the primary, Sage Products Holdings III LLC reduced pricing and added a step-down on its first-lien term loan and tightened original issue discounts on its first- and second-lien debt, and Royalty Pharma cut the size of its term loan B-4 while reverse flexing pricing.

Also, Siemens Audiology Systems (Auris Luxembourg III Sarl) upsized its term loan B, Multi Packaging Solutions finalized spreads on its term loans, and Capella Healthcare Inc. accelerated the commitment deadline on its loan.

Furthermore, Liberty Cablevision of Puerto Rico LLC launched incremental term loans to investors, and Electrical Components International Inc. is getting ready to bring an add-on term loan B to market.

Creative Artists tweaked

Creative Artists Agency pushed out the 101 soft call protection on its $510 million seven-year covenant-light term loan B to one year from six months and removed an 18-month MFN sunset provision so that there is 50 bps MFN for life, according to a market source.

Pricing on the term loan remained at Libor plus 450 basis points with a 1% Libor floor and an original issue discount of 99.

The company’s $610 million credit facility (B2/BB-) also provides for a $100 million five-year revolver.

Following the adjustments to terms, the deal allocated and freed up for trading on Wednesday, with the term loan B quoted at 99¼ bid, 99¾ offered, a trader said.

Bank of America Merrill Lynch, Credit Suisse Securities (USA) LLC, UBS AG and Nomura are leading the credit facility that will be used to refinance existing debt and fund a dividend.

Creative Artists is a Los Angeles-based entertainment and sports firm. Recently, it was announced that TPG is increasing its investment in the company to a majority position.

Varsity Brands tops OID

Varsity Brands’ $755 million seven-year covenant-light term loan B (B1) hit the secondary too, with levels seen at 99¼ bid, par offered, a trader remarked.

Pricing on the loan is Libor plus 500 bps with a 1% Libor floor and it was sold at an original issue discount of 99. There is 101 soft call protection for six months.

Goldman Sachs Bank USA, Barclays and Jefferies Finance LLC are leading the deal that will be used to help fund the buyout of the company by Charlesbank Capital Partners.

Varsity Brands’ senior leadership will remain in their current positions and, under the terms of the proposed transaction, invest in the company alongside Charlesbank.

Closing is expected this month, subject to customary conditions.

Varsity Brands is a Memphis, Tenn.-based portfolio of brands that promote student participation while celebrating academic and athletic achievement.

Sage modifies deal

In other happenings, Sage Products trimmed pricing on its fungible $315 million incremental first-lien covenant-light term loan (B) to Libor plus 400 bps from Libor plus 425 bps, added a step-down to Libor plus 375 bps when first-lien leverage is 3.25 times and tightened the original issue discount to 99½ from 99, according to a market source, who said the 1% Libor floor and 101 soft call protection for six months were unchanged.

Additionally, the discount on the company’s fungible $65 million incremental second-lien covenant-light term loan (CCC+) was revised to 99½ from 99, while pricing was left at Libor plus 800 bps with a 1.25% Libor floor, the source continued. This tranche still has 101 hard call protection until Dec. 13, 2015.

In connection with the incremental loan, the company will reprice its existing $274.3 million first-lien term loan to match the incremental pricing from Libor plus 325 bps with a 1% Libor floor. The spread and floor on the incremental second-lien term loan already match current pricing on the existing $200 million second-lien term loan.

Sage funding dividend

Proceeds from Sage Products’ $380 million in incremental term loans will be used to pay a shareholder distribution and pay related fees and expenses.

Recommitments were due at 5 p.m. ET on Wednesday, the source added.

Barclays and Deutsche Bank Securities Inc. are leading the deal.

Along with this transaction, the company is seeking an amendment to its existing credit facility to allow for the incremental debt and the one-time restricted payment, and first- and second-lien lenders are being offered a 25 bps amendment fee.

Net first-lien leverage is 4.2 times and net total leverage is 6.1 times.

Sage Products is a Cary, Ill.-based developer of products primarily for hospital intensive care units, which help prevent hospital-acquired conditions.

Royalty Pharma reworked

Royalty Pharma trimmed its term loan B-4 to $700 million from $1.5 billion and cut pricing to Libor plus 275 bps from talk of Libor plus 300 bps to 325 bps, while leaving the 0.75% Libor floor, original issue discount of 99½ and 101 soft call protection for one year intact, a source remarked.

Recommitments were due at 5 p.m. ET on Wednesday, the source added.

In connection with the term loan B-4 downsizing, the company upsized its term loan A to $2 billion from $1 billion.

Bank of America Merrill Lynch, Goldman Sachs Bank USA and J.P. Morgan Securities LLC are leading the deal that will be used to repay short-term debt that was used to fund the $3.3 billion acquisition of royalties on Vertex Pharmaceuticals’ cystic fibrosis treatments owned by Cystic Fibrosis Foundation Therapeutics.

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

Siemens Audiology upsizes

Siemens Audiology Systems raised its U.S. dollar and euro seven-year covenant-light term loan B to €785 million equivalent from €745 million equivalent, with the debt split between a €300 million tranche and a $600 million tranche, according to a market source.

Also, the commitment deadline was moved up to close of business on Thursday from Friday.

As before, the loan is talked at Libor/Euribor plus 450 bps to 475 bps with a 1% floor, an original issue discount of 99 and 101 soft call protection for six months.

Deutsche Bank Securities Inc., Goldman Sachs Bank USA and UBS AG are the physical bookrunners on the deal, with UniCredit a joint bookrunner. Goldman Sachs is the left lead on the U.S. debt, and Deutsche Bank is the left lead on the euro debt as well as the administrative agent.

Proceeds along with €275 million, downsized from €315 million with the term loan upsizing, will be used to fund the buyout of the company by EQT VI and Santo Holding from Siemens AG.

Siemens Audiology is a Singapore-based manufacturer and wholesaler of hearing aid devices.

Multi Packaging sets pricing

Multi Packaging Solutions firmed the spread on its £143.6 million term loan B due September 2020 at Libor plus 450 bps, the wide end of the Libor plus 425 bps to 450 bps talk, and on its €170.9 million term loan B due September 2020 at Euribor plus 375 bps, the tight end of the Euribor plus 375 bps to 400 bps talk, a market source said.

The loans still have a 1% floor, a par offer price and 101 soft call protection for six months.

Credit Suisse is leading the deal that will be used to refinance an existing pound sterling term loan priced at Libor plus 500 bps with a 1% Libor floor and a euro term loan B priced at Euribor plus 450 bps with a 1% floor.

Multi Packaging is a New York-based provider of value-added packaging services.

Capella shutting early

Capella Healthcare moved up the commitment deadline on its $100 million seven-year first-lien covenant-light term loan (Ba2/BB-) to Friday from Tuesday, a market source said.

The term loan is talked at Libor plus 450 bps with a 1% Libor floor, an original issue discount of 99 and 101 soft call protection for six months.

Credit Suisse Securities (USA) LLC and Citigroup Global Markets Inc. are leading the deal that will be used to fund the acquisition of Carolina Pines Regional Medical Center and its related outpatient services from Community Health Systems Inc.

The transaction is subject to customary regulatory approvals.

Capella Healthcare is a Franklin, Tenn.-based developer and operator of health care facilities. The Carolina Pines Regional Medical Center is comprised of an acute care hospital and an adjoining medical office building in Hartsville, S.C.

Liberty Cablevision call

Also on the primary front, Liberty Cablevision of Puerto Rico emerged in the morning with plans to hold a lender call at 11 a.m. ET on Wednesday to launch $257.5 million of tack-on term loans, according to a market source.

The debt consists of a $225 million tack-on first-lien term loan due Jan. 7, 2022 talked at Libor plus 350 bps with a 1% Libor floor, an original issue discount of 98½ to 99 and 101 soft call protection for six months, and a $32.5 million tack-on second-lien term loan due Jan. 7, 2023 talked at Libor plus 675 bps with a 1% Libor floor, an offer price of 99½ to par, and hard call protection of 102 through July 2015 and 101 for a year thereafter, the source said.

In addition, the tack-on debt is talked with a ticking fee of the full spread after 30 days.

Spreads and floors on the tack-on term loans match the existing first- and second-lien term loans.

Liberty Cablevision leads

Credit Suisse Securities (USA) LLC and Scotia Bank are leading Liberty Cablevision of Puerto Rico’s new loans, with Scotia the administrative agent.

Commitments are due on Monday, the source added.

Proceeds will be used to fund the acquisition of Choice Cable TV by Liberty Global plc and Searchlight Capital Partners LP and combination with Liberty Cablevision of Puerto Rico. The combined business will be 60%-owned by Liberty Global and 40%-owned by Searchlight.

The acquisition values Choice at about $272.5 million, before transaction costs.

Closing is expected in the first half of 2015, subject to customary conditions, including regulatory approvals.

Liberty Cablevision of Puerto Rico and Choice Cable are cable TV service providers in Puerto Rico.

Electrical Components on deck

Electrical Components surfaced with plans to hold a call at 1 p.m. ET on Thursday to launch a fungible $40 million add-on term loan B due May 2021 that is talked at Libor plus 475 bps with a step-down to Libor plus 450 bps when total net leverage is less than 3.5 times, a 1% Libor floor, 101 soft call protection until May 2015 and an original issue discount that is still to be determined, according to a market source.

Spread, floor and call protection on the add-on loan match the existing term loan.

Commitments are due by 5 p.m. ET on Tuesday, the source said.

Bank of America Merrill Lynch and GE Capital Markets Inc. are leading the deal that will be used to fund the acquisition of Global Harness Systems Inc.

Closing is expected in January.

Electrical Components is a St. Louis-based manufacturer of wire harnesses and value-added assembly services for consumer appliance and specialty-industrial applications. Global Harness is a Bala Cynwyd, Pa.-based manufacturer of wire harnesses and panel assemblies.

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