Claire's still falling; Rite Aid slides; Western Refining amendment OK'd; Lender Processing nets interest

By Sara Rosenberg

New York, June 13 - Claire's Stores Inc.'s term loan softened some more in an overall light trading day with the company's earnings results still being blamed for the drop, and Rite Aid Corp.'s existing term loan continued to inch lower on the recent incremental debt news.

In other news, Western Refining Inc.'s amendment was approved by lenders, and Lender Processing Services Inc.'s credit facility is heard to have gotten good feedback so far from lenders as the credit itself is viewed quite positively.

Claire's Stores' term loan gave up some more ground on Friday with investors continuing to cite first-quarter numbers as the impetus behind the negative momentum, according to a trader.

The term loan was quoted at 75 bid, 75½ offered, the trader said, down from Thursday's levels of 75¼ bid, 76¼ offered, Wednesday's levels of 76¼ bid, 77 offered and Tuesday's levels of 78 bid, 79 offered.

Late Tuesday night, Claire's came out with first-quarter financials that showed net sales of $327 million, down 4% year over year.

Adjusted EBITDA for the quarter was $34.3 million compared to $60.6 million in the 2007 first quarter.

And, cash used by operating activities was about $1.4 million, compared with cash provided by operating activities of $20.3 million in the same period last year.

Claire's is a Pembroke Pines, Fla.-based specialty retailer of value-priced jewelry and accessories for girls and young women.

Rite Aid weakens

Rite Aid's existing term loan traded down during market hours as people were still reacting to the company's decision to get more term loan debt, according to a trader.

The term loan was quoted at 91¾ bid, 92¾ offered, down from 92 bid, 93 offered on Thursday and 93 bid, 94 offered on Wednesday, the trader said.

On Thursday afternoon, Rite Aid held a conference call to launch a $350 million senior secured tranche 3 term loan (Ba3/BB-) due June 4, 2014 that is talked at Libor plus 225 basis points with a 3% Libor floor and an original issue discount of 94.

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 and the consent solicitations related to the company's $360 million 8.125% senior secured notes due 2010, $200 million 7.5% senior secured notes due 2015 and $150 million 9.25% senior notes due 2013.

The remaining purchase price is expected to be funded with a new series of senior secured notes due 2016 that, assuming all notes are tendered, will be sized at $425 million.

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

Western Refining passes

In more loan happenings, Western Refining's amendment received the required number of lender consents by Friday's noon E.T. deadline, meaning that the amendment is approved and is expected to become effective during the June 16 week, according to a market source.

Under the amendment, the company's leverage covenant is being waived for the second quarter and replaced by a minimum-EBITDA requirement in the third and fourth quarters, and is being loosened in 2009.

Pricing on the term loan B is increasing to Libor plus 450 bps from Libor plus 175 bps. Initially, the company was offering pricing of Libor plus 375 bps, but that was changed during the amendment process.

The term loan B will be subject to a pricing grid that becomes effective on Oct. 1 and is based on the amount of principal reduction on the term loan B. The grid pricing ranges from Libor plus 400 bps to Libor plus 600 bps. This feature was also added during the amendment negotiations.

In addition, the term loan B is going to have a 3.25% Libor floor.

Furthermore, commitments are being sought to increase the company's revolver to $1 billion from $800 million.

Lenders are getting a 100 bps consent fee, with the first 50 bps payable at the effectiveness of the amendment and the remaining 50 bps payable at the end of the third quarter. Initially, the company was proposing to pay lenders the first part of the consent fee on June 30.

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

Following news that the amendment passed, Western Refining's term loan B was quoted at around 96½ bid, 96¾ offered, unchanged from Thursday's levels, a trader remarked.

It was "very quiet all day. [There were a] handful of trades early. I think by the time the amendment news hit, half the investment community was on the way to the golf course," the trader added.

Western Refining is an El Paso, Texas-based independent crude oil refiner and marketer of refined products.

Lender Processing going well

Market chatter is that Lender Processing Services' $1.31 billion senior secured credit facility (Baa3/BBB) is coming along nicely in terms of syndication as people like the company story, according to a buyside source.

The deal, which launched with a bank meeting on June 2, is comprised of a $125 million five-year revolver talked at Libor plus 250 bps to 275 bps, a $700 million five-year term loan A talked at Libor plus 250 bps to 275 bps and a $485 million six-year term loan B talked at Libor plus 275 bps to 300 bps.

The term loan B is being offered at an original issue discount that is talked in the 98½ context.

No official word has come out as of yet as to where the spreads on the deal might firm up.

"Got good response to it. A lot of people came in early. From my understanding there were a lot of existing lenders from the past," the source said about the credit facility.

"People know the name pretty well. [It's a] fairly straight forward story - decent leverage, high free cash flow," the source continued.

"I'm not hearing anything negative about it in the market so I'm guessing [the B loan] is pretty much done. If it's a blowout, this thing will get done at the tight end of talk. I don't think [the B] will come at 250. At that rate I think this whole thing unravels. I'd say it's possible that the B comes at 275.

"Deal will take a little longer because they have a $700 million A to place and commercial banks take their time," the source added.

JPMorgan, Bank of America and Wachovia are the lead banks on the credit facility that will be used to help fund the tax-free spinoff of the company from Fidelity National Information Services Inc.

Other financing for the spinoff will come from a $400 million offering of eight-year senior notes that are in the roadshow process.

Completion of the spinoff is expected to occur in mid-2008.

Lender Processing Services is a provider of integrated data, servicing and technology solutions to large-scale mortgage lenders.

Scientific Games closes

Scientific Games International Inc. closed on its new $800 million senior secured credit facility (Baa3/BBB-), according to a news release.

The facility consists of a $250 million revolver and a $550 million term loan, with both tranches priced at Libor plus 250 bps.

During syndication, the term loan was downsized from $600 million.

JPMorgan acted as the lead bank on the deal that was used to help refinance the company's existing credit facility and for general corporate purposes.

Scientific Games is a New York supplier of technology-based products, systems and services to gaming markets.

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