TASC breaks; Warner Chilcott up with B-1 add-on; Navistar rises; Green Tree tweaks OID

By Sara Rosenberg

New York, Dec. 14 - TASC Inc.'s credit facility allocated and freed up for trading on Monday morning, with the term loan A and the term loan B quoted above their original issue discount price.

Also in trading, Warner Chilcott plc's strip of term loan debt was stronger after the company revealed plans to do an add-on and eliminate the unfunded delayed-draw loan, and Navistar International Corp.'s term loan A was a little better as its protest of a government contract awarded to Oshkosh Corp. found some footing.

In other news, Green Tree Financial increased the original issue discount on its term loan B for a second time and is now getting ready to allocate the deal early in the day on Tuesday.

TASC frees to trade

TASC's credit facility hit the secondary market on Monday, with both the term loan A and the term loan B seen trading above the discount prices at which they were issued during syndication, according to a market source.

The $200 million term loan A was quoted at par 3/8 bid, par 5/8 offered in the afternoon, up from levels of 99½ bid on the break, the source said.

And, the $390 million term loan B was quoted at par ½ bid, par ¾ offered in the afternoon, up from levels of 99¾ bid on the break, the source added.

Pricing on the term loan A is Libor plus 350 basis points and pricing on the term loan B is Libor plus 375 bps. Both term loans have a 2% Libor floor and were sold at an original issue discount of 99.

During syndication, pricing on the term loan A was lowered from Libor plus 375 bps, pricing on the term loan B was lowered from Libor plus 400 bps and the discount on both tranches was tightened from 981/2.

TASC also getting revolver

TASC's $690 million senior secured credit facility (Ba2/BB) also includes a $100 million revolver priced at Libor plus 350 bps with a 2% Libor floor and an original issue discount of 98.

Pricing on the revolver had been flexed lower from initial talk of Libor plus 375 bps during syndication.

Proceeds from the credit facility will be used to help fund the purchase of the company by an investor group led by General Atlantic LLC and Kohlberg Kravis Roberts & Co. from Northrop Grumman Corp. in a transaction valued at $1.65 billion.

Other financing for the buyout will come from $310 million of senior subordinated notes (mezzanine debt) that has been pre-placed. KKR Capital Markets arranged the mezzanine financing, and Highbridge Mezzanine Partners is the lead investor.

Barclays Capital, Deutsche Bank Securities and RBC Capital Markets are the lead banks on the deal, with Barclays the left lead. In addition, CPPIB Credit Investments Inc. has provided commitments toward the facility as an investor.

TASC is a Chantilly, Va.-based provider of advanced systems engineering and technical assistance to the defense, intelligence, federal, state and local markets.

Warner Chilcott moves higher

Warner Chilcott's strip of term loan B-1, B-2 and delayed-draw term loan gained some ground in trading following news that the unfunded delayed-draw loan will be eliminated from the company's capital structure and, instead, a new term loan B-1 add-on will take its place, according to sources.

The strip of debt was quoted by one source at par ¼ bid, par ½ offered, up from 99¾ bid, par ¼ offered and by a second source at par 1/8 bid, par ½ offered, up from 99 7/8 bid, par 3/8 offered.

On Monday, the company launched through an announcement a $350 million add-on to its term loan B-1 to replace its existing $350 million delayed-draw term loan that it wishes to cancel.

The add-on is priced at Libor plus 350 bps with a 2.25% Libor floor, which is the same as the existing term loan B-1 pricing.

However, the original issue discount on the add-on is being talked at 99 5/8, whereas the existing term loan B-1 was sold at an original issue discount price of 99.

Warner Chilcott refinancing notes

Warner Chilcott is getting the term loan B-1 add-on to replace the delayed-draw term loan because it has a new use of proceeds for the debt.

Earlier this year, the delayed-draw term loan was obtained to fund the put of bonds, if necessary, but that put didn't occur.

Now, the company is replacing the delayed-draw term loan with a term loan B-1 add-on so that it instead can pay off its 8.75% senior subordinated notes due 2015.

Bank of America is the left lead bank on the deal.

Commitments towards the add-on are due on Tuesday.

Warner Chilcott is a Rockaway, N.J.-based specialty pharmaceutical company.

Navistar rises

Navistar's term loan A was stronger on Monday as news emerged that the company's protest of a government contract awarded to Oshkosh was "sustained" by the Government Accountability Office (GAO), according to traders.

The term loan A was quoted by traders at 99 bid, 99¾ offered, up a quarter of a point on the day.

The contract that is being disputed is the Army Tank-automotive and Armaments Command's award of the Family of Medium Tactical Vehicles (FMTV) program to Oshkosh.

"We appreciate the time and effort the GAO invested in the review of the FMTV solicitation process," said Archie Massicotte, president, Navistar Defense, in a news release.

"We welcome today's ruling and we will wait for further direction from the Army regarding what may be required of us moving forward," Massicotte added.

Navistar is a Warrenville, Ill.-based holding company whose subsidiaries and affiliates produce commercial and military trucks, diesel engines, school and commercial buses, recreational vehicles and chassis for motor homes and step vans.

Oshkosh steady

Meanwhile, Oshkosh's term loan held firm at 99¼ bid, par ¼ offered following the news on the FMTV program, traders said.

According to Oshkosh, the majority of the protesters' claims were denied, including challenges to the evaluation of the price.

"At Oshkosh, we appreciate the GAO's thorough review and welcome the Army's re-evaluation of the two narrow issues recommended for reconsideration. We believe that our FMTV offer was, and continues to be, the best value for the U.S. Army, our troops and the U.S. taxpayer," said Robert G. Bohn, chairman and chief executive officer, in a release.

"It is important to realize that today's decision did not recommend proposal revisions nor did it recommend termination of our contract. We believe that when these narrow issues are reconsidered, the Army's decision to award Oshkosh Corp. the FMTV contract will be maintained," Bohn added.

Oshkosh is an Oshkosh, Wis.-based designer, manufacturer and marketer of specialty access equipment, commercial, fire & emergency and military vehicles and vehicle bodies.

Dynegy firm with debt reduction

Dynegy Inc.'s strip of institutional bank debt was unchanged to higher after the company announced plans to repurchase notes in a transaction that is expected to be completed by year-end, according to traders.

The strip of debt was quoted by one trader at 95 bid, 96 offered, up a quarter of a point, and by a second trader at 94½ bid, 95½ offered, flat from previous levels.

Dynegy said on Monday that it has negotiated an agreement to repurchase from a fixed-income investor about $420 million of its outstanding 6.875% senior unsecured notes due 2011 and about $410 million of its outstanding 8.75% senior unsecured notes due 2012.

"This transaction will significantly reduce the company's debt obligations in 2011 and 2012, while also reducing interest payments and eliminating refinancing risks associated with our near-term debt profile," said Holli C. Nichols, executive vice president and chief financial officer, in a news release.

"With reduced near-term debt obligations through 2012, we are better able to weather near-term market uncertainty without a pressing need to access the capital markets," Nichols added.

Dynegy is a Houston-based producer and seller of electric energy, capacity and ancillary services.

Green Tree ups OID

Moving to the primary market, Green Tree Financial once again raised the original issue discount on its $350 million term loan B, this time finalizing it at 95 compared to most recent talk that was in the 96 area, according to a market source.

Initially, the original issue discount was being guided in the 97 context but it was increased by 100 basis points late last week.

Meanwhile, pricing on the term loan B firmed at Libor plus 575 bps with a 2.25% Libor floor.

The spread on the loan had been revised from initial talk of Libor plus 500 bps last week as well, but the Libor floor has remained the same throughout syndication.

Amortization on the term loan B is 2% per quarter.

Green Tree allocating shortly

Now that pricing on the term loan B has been finalized, allocations on the deal are expected to go out on Tuesday morning, the source remarked.

Deutsche Bank and Credit Suisse are the joint lead arrangers on the deal that will be used to repay debt and fund a dividend, with Deutsche the left lead.

The company's $380 million credit facility (B1/B+) also includes a $30 million revolver.

Green Tree is a fee-based servicing company that provides third-party servicing for consumer loans.

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