SourceHOV, Vertellus break; TASC rises; INC Research, Block Communications update deals

By Sara Rosenberg

New York, Oct. 29 – SourceHOV LLC and Vertellus Specialties Inc. surfaced in the secondary market on Wednesday, and TASC Inc.’s first- and second-lien term loans were stronger with news of its acquisition by Engility Holdings Inc.

Moving to the primary, INC Research LLC finalized pricing on its term loan B at the low end of guidance, and Block Communications Inc. tightened the spread and original issue discount on its term loan while also adding a pricing step-down.

Furthermore, Panda Stonewall and Express Energy Services LLC released price talk on their deals with launch, and Navex Global, Endemol and US LBM emerged with new loan plans.

SourceHOV hits secondary

SourceHOV’s credit facility freed up for trading on Wednesday, with the $780 million five-year first-lien term loan B (B1/B) quoted at 97¼ bid, 97¾ offered and the $250 million 5½-year second-lien term loan (Caa1/CCC+) quoted at 96¼ bid, 96¾ offered, according to a trader.

Pricing on the first-lien term loan is Libor plus 675 basis points with a 1% Libor floor and it was sold at an original issue discount of 97. There is 101 soft call protection for one year.

The second-lien term loan is priced at Libor plus 1,050 bps with a 1% Libor floor and was issued at 96. This tranche is non-callable for one year, then at 103 in year two, 102 in year three and 101 in year four.

During syndication, pricing on the first-lien term loan firmed at the wide end of revised talk of Libor plus 650 bps to 675 bps and up from initial talk of Libor plus 525 bps, the discount widened from 99 and the maturity was shortened from six years, and pricing on the second-lien term loan finalized at the high end of revised talk of Libor plus 1,025 bps to 1,050 bps and up from initial talk of Libor plus 875 bps.

The discount was modified from 98½, the maturity was shortened from 6½ years and call protection was sweetened from 102 in year one and 101 in year two. Also, the incremental loan allowance, the excess cash flow sweep and the leveraged ratio calculation were adjusted.

SourceHOV getting revolver

In addition to the first- and second-lien term loans, SourceHOV’s $1,105,000,000 credit facility includes a $75 million revolver (B1/B).

Morgan Stanley Senior Funding Inc. is leading the deal that will be used to refinance existing debt, redeem certain existing SourceHOV equity holders and provide additional working capital in connection with the company’s acquisition of BancTec Group.

As part of the transaction, stockholders of BancTec will receive stock in SourceHOV.

Closing is expected this year, subject to customary conditions, including regulatory approvals.

SourceHOV and BancTec are Dallas-based providers of transaction processing services.

Vertellus starts trading

Vertellus Specialties’ $455 million five-year term loan B allocated and broke for trading as well, with levels seen at 96½ bid, 97½ offered, a trader remarked.

Pricing on the loan is Libor plus 950 bps with a 1% Libor floor and it was sold at an original issue discount of 96½. There is call protection of 104 in year one, 102½ in year two and 101 in year three.

During syndication, pricing on the term B was lifted from Libor plus 900 bps and the discount was revised from 98.

Jefferies Finance LLC is leading the deal that will be used to refinance notes and fund an acquisition.

Vertellus is an Indianapolis-based provider of specialty chemicals for the agriculture, nutrition, pharmaceutical and medical, personal care, plastics, coatings and industrial markets.

TASC gains ground

Also in trading, TASC’s first- and second-lien term loans moved higher on the heels of an announcement that Engility is buying TASC from Kohlberg Kravis Roberts & Co. LP and General Atlantic LLC in an all-stock transaction valued at about $1.1 billion, including the assumption of about $613 million of net debt, according to a trader.

The first-lien term loan was quoted at 98½ bid, 99 offered, up from 94½ bid, 95½ offered, and the second-lien term loan was quoted at 97¼ bid, up from 95 bid, 97 offered, the trader said.

With the transaction, TASC plans on getting a $40 million incremental senior secured revolver, a $435 million incremental senior secured first-lien term loan and $150 million of senior secured second-lien term loan borrowings or debt securities.

Backing the second-lien loan and or debt securities is a commitment for a $150 million senior secured second-lien bridge loan.

The new debt will be incurred under and pursuant to increases in the existing TASC credit facility, which will be amended, and assumed by Engility as part of the acquisition.

TASC lead banks

Barclays and Jefferies Finance LLC are leading the financing for TASC that will be used to refinance existing Engility debt and to fund a special cash dividend of about $11.40 per share for each Engility share owned, subject to final adjustments.

Net debt to 2014 adjusted EBITDA will be about 4.7 times, with the goal being to reduce net debt to trailing 12-month adjusted EBITDA to around 2.5 times by the end of 2017.

Closing is expected in the first quarter of 2015, subject to approval of stockholders of both Engility and TASC, consummation of the contemplated financing, regulatory approvals including clearance under the Hart-Scott-Rodino Antitrust Improvement Act of 1976 and other customary conditions.

TASC is a Chantilly, Va.-based professional services provider to the national security and public safety markets. Engility is a Chantilly, Va.-based pure-play government services contractor.

INC Research sets spread

Switching to the primary, INC Research firmed pricing on its $425 million seven-year term loan B at Libor plus 375 bps, the tight end of the Libor plus 375 bps to 400 bps talk, and kept the 25 bps step-down after a minimum $75 million initial public offering and leverage of less than 4 times, 1% Libor floor, original issue discount of 99 and 101 soft call protection for six months unchanged, according to a market source.

The company’s $525 million credit facility also includes a $100 million five-year revolver.

Allocations are targeted for Thursday, the source added.

Goldman Sachs Bank USA, Credit Suisse Securities (USA) LLC, ING Capital Markets, RBC Capital Markets and Wells Fargo Securities LLC are leading the deal that will be used to refinance existing debt.

INC Research is a Raleigh, N.C.-based therapeutically focused contract research organization.

Block tweaks deal

Block Communications cut pricing on its $225 million seven-year covenant-light term loan B (Ba1/BB+) to Libor plus 350 bps from Libor plus 375 bps, added a step-down to Libor plus 325 bps at 3 times total leverage and moved the original issue discount to 99½ from 99, a source said.

As before, the term loan has a 0.75% Libor floor and 101 soft call protection for six months.

Recommitments are due at 10 a.m. ET on Thursday, the source added.

Bank of America Merrill Lynch and J.P. Morgan Securities LLC are leading the deal that will be used to fund the acquisitions of MetroCast and Line Systems Inc.

Block Communications is a Toledo, Ohio-based diversified media company.

Panda Stonewall guidance

In more primary news, Panda Stonewall held its bank meeting on Wednesday, launching its $475 million of term loans with talk of Libor plus 600 bps with a 1% Libor floor, an original issue discount of 99, and call protection of non-callable for 2½ years, then at 102 for a year and 101 for the following year, a source said.

The debt consists of a $325 million funded term loan, and a $150 million single-draw one-year delayed-draw term loan that has a 300 bps ticking fee, the source continued.

Commitments are due on Nov. 10.

Goldman Sachs Bank USA, Credit Suisse Securities (USA) LLC, ICBC, Investec and MUFG are leading the deal that will be used to fund construction of the Panda Stonewall Power Project, a clean natural gas-fueled 778-megawatt combined-cycle generating station in Loudoun County, Va.

Panda Stonewall is owned by Panda Power Funds, and partners in the project include Bechtel Development and Green Energy Partners/Stonewall.

Express Energy reveals talk

Express Energy Services came out with talk of Libor plus 675 bps with a 1% Libor floor, an original issue discount of 98½ and hard call protection of 102 in year one and 101 in year two on its $220 million seven-year term loan B (B3/B) that launched with a morning bank meeting, a market source remarked.

The company’s $280 million credit facility also includes a $60 million five-year ABL revolver.

Commitments are due on Nov. 12, the source added.

UBS AG and Goldman Sachs Bank USA are leading the deal that will be used to help fund the buyout of the company by Apollo Global Management LLC.

Express Energy is a Houston-based oilfield services company.

Navex Global on deck

Navex Global scheduled a bank meeting for Thursday morning to launch a $310 million credit facility, according to a market source.

The facility consists of a $20 million revolver, a $200 million first-lien covenant-light term loan and a $90 million second-lien term loan, the source said.

GE Capital Markets and Golub Capital are leading the deal that will be used with equity to fund the buyout of the company by Vista Equity Partners from The Riverside Co.

Navex Global is a Lake Oswego, Ore.-based provider of ethics and compliance software, content and services.

Endemol readies deal

Endemol emerged with plans to hold a bank meeting at noon ET in New York on Monday, and one-on-one meetings with investors in New York on Monday and in London on Nov. 5, to launch a $300 million U.S. and euro add-on term loan due Aug. 13, 2021, according to a market source.

Price talk on the U.S. tranche is Libor plus 575 basis points with a 1% Libor floor and price talk on the euro tranche is Euribor plus 600 bps with a 1% floor, the source said, adding that original issue discounts and the breakdown of the U.S. and euro tranche sizes are still to be determined.

Deutsche Bank Securities Inc., Credit Suisse Securities (USA) LLC and Nomura are leading the deal.

Proceeds will be used to help fund the 50/50 joint venture between 21st Century Fox and Apollo Global Management LLC to combine Endemol, Shine Group and CORE Media to create a multi-platform content provider. CORE will maintain an independent capital structure.

Closing is expected by year-end.

Endemol is an Amsterdam-based creator, producer and distributor of multiplatform entertainment.

US LBM coming soon

US LBM set a call for 10:30 a.m. ET on Thursday to launch a fungible $150 million tack-on senior secured term loan due May 2020 that is talked at Libor plus 700 bps with a 1% Libor floor and an original issue discount of 98 and will be used to fund two acquisitions, a market source said.

With the tack-on loan, pricing on the company’s existing $200 million term loan will be increased to Libor plus 700 bps with a 1% Libor floor from Libor plus 625 bps with a 1% Libor floor, and all of the debt will get call protection of 102 in year one, 101½ in year two and 101 in year three, the source continued.

Credit Suisse Securities (USA) LLC is leading the deal for which commitments are due on Nov. 6.

Existing lenders are being offered a 25 bps amendment fee to consent to the transaction.

US LBM is a Green Bay, Wis.-based owner of building material distribution businesses.

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