Shackleton, Rexnord tweak deals; TelePacific sets talk; Revlon upsizes, Toys breaks; Spectrum weakens

By Sara Rosenberg

New York, July 17 - Shackleton Re Ltd. reworked its credit facility Monday, carving a bond deal out of its term loan A, resetting term loan B price talk at the high end of original guidance and widening term loan C price talk.

In other primary news, TelePacific Communications came out with price talk on its credit facility, Rexnord Corp. made a final round of adjustments to its deal, adding a step down in pricing and soft call protection to the covenant-light term loan tranche, and Revlon Consumer Products Corp. upsized its term loan add-on.

Switching to the secondary, Toys 'R' Us Inc.'s credit facility freed for trading with the senior secured term loan tranche quoted atop par, and Spectrum Brands Inc.'s bank debt headed lower as the company announced that it was reducing 2006 earnings guidance.

Shackleton announced some changes to its credit facility, downsizing the term loan A tranche and creating a new bond offering with the lost funds, and tweaking term loan B and term loan C spread guidance, according to a market source.

The two-year first event California earthquake term loan A (BB) can now carry a size of $50 million, down from an original size of $125 million, as an up to $75 million floating-rate 11/2-year bond has been carved out of the loan, the source said.

Both the term loan A and the floating-rate notes are being talked in the Libor plus 800 basis points area, which is where the term loan A has been talked since launch, and they will rank pari passu with each other.

Marketing on the bond is taking place this week with "significant interest" on the paper already seen by the market, the source continued.

In addition to the term loan A modifications, Shackleton revisited price talk on its term loan B and term loan C tranches.

The $50 million first event U.S. hurricane term loan B (BB) is now being talked in the Libor plus 800 basis points area, the high end of original price talk at launch of around the Libor plus 750 to 800 basis points area, the source said. This tranche is already oversubscribed.

Meanwhile, the $125 million second event U.S. hurricane and California earthquake term loan C (BB+) is now being talked at Libor plus 700 to 750 basis points, widening out from original guidance at launch that was in the Libor plus 700 basis points area, the source added.

Final sizes on the Rule 144A bond offering and the term loan A, as well as pricing on the term loan B and the term loan C, are expected to be firm up by mid-to-late this week.

Goldman Sachs is the lead bank on the catastrophe credit facility, which could end up with a minimum size of $225 million, compared to an original size of $300 million.

Shackleton is a special-purpose Cayman Islands exempted company licensed as a restricted class B insurer in the Cayman Islands.

The loans are being done for Endurance Specialty Insurance Ltd.

TelePacific price talk

TelePacific released price talk on its proposed $305 million senior secured credit facility as syndication on the deal officially kicked off Monday with an afternoon bank meeting that went very well, according to a market source.

Both the $30 million revolver (B2/B-) and the $175 million first-lien term loan (B2/B-) were launched to investors with opening price talk of Libor plus 450 basis points, and the $100 million second-lien term loan was launched to investors with opening price talk of Libor plus 825 basis points, the source said.

The second-lien term loan contains call protection of 103 in year one, 102 in year two and 101 in year three, the source added.

Credit Suisse and Bank of America are the joint lead arrangers on the deal.

Proceeds will be used to fund the acquisition of Mpower Holding Corp. for $1.92 in cash per Mpower share, which equates to a total equity value of about $204 million on a fully diluted basis.

TelePacific, an Investcorp portfolio company, is a Los-Angeles-based provider of business telecommunications network solutions to small-to-medium sized businesses in California and Nevada. Mpower is a Pittsford, N.Y.-based broadband communications provider.

Rexnord fine tunes term loan

Rexnord (RBS Global Inc.) made some last alterations to its $610 million covenant-light term loan, including adding a pricing step down and soft call protection, and is now hoping to allocate the deal on Tuesday, according to a market source.

The term loan is priced with an interest rate of Libor plus 250 basis points. Under the most recent changes, pricing now has the ability to step down to Libor plus 225 basis points if the company's corporate credit ratings are upgraded by one notch, the source said. The tranche was originally launched in June with price talk of Libor plus 200 basis points, but pricing was flexed up by 50 basis points earlier on in the syndication process.

In addition, under the most recent modifications, the term loan now contains 101 soft call protection for one year, the source added.

Around mid-last week, the term loan had undergone a change in size, going from $580 million to $610 million, after the company downsized its bond offering.

Rexnord's $760 million credit facility (B1/B+) also contains a $150 million revolver, upsized from $125 million last week when the bonds were downsized, with an interest rate of Libor plus 225 basis points and a 50 basis point commitment fee.

The company's $785 million bond offering - reduced from an original size of $840 million - priced this past Friday, with the $485 million eight-year notes coming at par to yield 9½% and the $300 million 10-year senior subordinated notes coming at par to yield 11¾%.

The eight-year notes, which had been upsized from $420 million, had been talked around 9¼%, and the 10-year notes, which had been downsized from an original size of $420 million, had most recently been talked around 11% to 11¼%.

Merrill Lynch, Credit Suisse, Bear Stearns and Lehman are the lead banks on the credit facility, with Merrill Lynch the left lead.

Proceeds from the credit facility and the bonds will be used to help fund the leveraged buyout of Rexnord by Apollo Management from The Carlyle Group and management.

Under the LBO agreement, Apollo is purchasing RBS Global, Inc., the corporate parent of Rexnord, for $1.825 billion.

Rexnord is a Milwaukee-based manufacturer of highly engineered precision motion technology products, primarily focused on power transmission.

Revlon ups add-on size

Revlon Inc.'s operating subsidiary Revlon Consumer Products increased the size of its in-market term loan B add-on (B3/B-) to $100 million from $75 million because of positive support from the lender group, according to a market source.

The add-on is being talked at Libor plus 600 basis points, in line with existing term loan pricing.

Citigroup is the lead bank on the deal that will be used for general corporate purposes.

In addition, the company is looking to amend its senior secured leverage ratio covenant to reset it at 5.5 to 1:00 through June 30, 2007, stepping down to 5.0 to 1:00 for the remaining term of the facility.

The amendment would also enable the company to exclude up to $25 million of restructuring charges and charges for certain product returns and/or product discontinuances from the definition of EBITDA.

Revlon currently intends to conduct a $75 million equity issuance in late 2006 or early 2007, which would be used to reduce debt at Revlon Consumer Products.

Revlon is a New York-based cosmetics, skin care, fragrance and personal care products company.

NTL shuts books

NTL Inc.'s subsidiary, NTL Investment Holdings Ltd., closed the books on its £300 million term loan C (B1/B+) due March 3, 2013 on Monday in both London and New York, according to a market source.

The term loan is priced with an interest rate of Libor plus 275 basis points.

Proceeds from the term loan C, along with proceeds from a notes offering, will be used to refinance the company's new alternative bridge facility.

The term loan C is expected to fund five business days after funding of the notes.

The new debt will complete the company's financing for the acquisition of Virgin Mobile Holdings plc and merger with Telewest Global.

JPMorgan, Deutsche Bank, Goldman Sachs and The Royal bank of Scotland are the lead banks on the deal.

NTL is a London-based communications company.

Herbalife oversubscribed

Herbalife Ltd.'s $300 million senior secured credit facility (Ba1) is oversubscribed now that Friday's commitment deadline has passed, and with the deal done, the syndicate is hoping to allocate as early as Tuesday, according to a market source.

The facility consists of a $200 million term loan B with an interest rate of Libor plus 150 basis points and a $100 million revolver with an interest rate of Libor plus 125 basis points.

Merrill Lynch, JPMorgan and Morgan Stanley are the lead banks on the deal, with Merrill the left lead.

Proceeds from the deal will be used to repay or redeem substantially all of the company's existing debt, including its outstanding 9½% notes due 2011.

Herbalife is a George Town, Cayman Islands, network marketing company that sells weight-management, nutritional supplements and personal care products.

Toys 'R' Us frees to trade

Moving to secondary news, Toys 'R' Us broke for trading with the $800 million senior secured term loan quoted at par bid, par ½ offered immediately on the open and then moving up to par ½ bid, par 7/8 offered, according to one trader, and par 5/8 bid, par 7/8 offered, according to a second trader.

The term loan is priced with an interest rate of Libor plus 450 basis points, is non-callable for one year, callable at 102 in year two and par thereafter, and was sold at an original issue discount of 991/2. During syndication, pricing on the tranche was flexed up from Libor plus 375 basis points, the call protection was sweetened and the original issue discount was added.

Toys 'R' Us' $1 billion senior secured credit facility (B1/B/CCC+) also contains a $200 million asset-sale bridge loan with an initial interest rate of Libor plus 300 basis points, stepping up to Libor plus 350 basis points after three months and to Libor plus 400 basis points after another three months. During syndication, pricing on this tranche was revised from talk of Libor plus 375 basis points.

In addition, during syndication, a $200 million accordion feature was removed from the credit agreement and some covenants under the asset-sale bridge loan were revised.

Bank of America, Deutsche Bank and Citigroup are the lead banks on the deal, with Bank of America the left lead.

Proceeds from the credit facility will be used to refinance the Wayne, N.J., specialty toy retailer's existing U.S. bridge loan.

Spectrum Brands falls on earnings cut

Spectrum Brands saw its bank debt drop off during trading as the company announced that its full-year 2006 earnings will be substantially lower than the latest earnings guidance released in early May, according to a trader.

Previous earnings estimations for fiscal-year 2006 included net sales of about $2.6 billion and pro forma fully diluted earnings per share of between $0.90 and $1.00.

No indication was given on Monday as to exactly where full-year earnings are now estimated to fall out, other than it will be lower than previously indicated.

The company said that the expected shortfall is attributable to lower-than-expected sales volumes, particularly in its European consumer battery business, and lower-than-expected results from shaving and grooming products in North America.

Spectrum Brands has hired Goldman Sachs and Co. as financial adviser to assist in evaluating potential selective asset sales designed to sharpen the focus on strategic growth businesses, maximize long-term shareholder value and reduce outstanding debt.

Currently, the company does anticipate remaining in compliance with debt covenants under its senior credit facility for the fiscal third quarter based on the preliminary estimates.

In reaction to the earnings news, the company's bank debt closed the day quoted at 99¼ bid, 99¾ offered, down from Friday's closing levels of par bid, par ½ offered, the trader said.

Spectrum Brands is an Atlanta-based consumer products company and a supplier of batteries and portable lighting, lawn and garden care products, specialty pet supplies, shaving and grooming and personal care products, and household insecticides.

Windstream closes

Alltel Corp. completed the merger of its wireline business with Valor Communications Group Inc. in a transaction valued at about $9.1 billion, according to a company news release.

The newly merged Central Arkansas-based company named Windstream Corp. got a $3.3 billion credit facility (Ba2/BB+/BBB-) to help back the transaction.

The facility consists of a $1.9 billion seven-year term loan B with an interest rate of Libor plus 175 basis points, a $500 million five-year revolver with an interest rate of Libor plus 150 basis points, a $500 million five-year term loan A with an interest rate of Libor plus 150 basis points and a $400 million five-year delayed-draw term loan C that will be available for four months.

JPMorgan and Merrill Lynch acted as joint lead arrangers and bookrunners on the credit facility, with JPMorgan the left lead.

Proceeds from the term loan A and term loan B are being used to help finance a $2.4 billion dividend payment to Alltel, to refinance Valor's existing credit and to refinance approximately $81 million of Alltel's outstanding bonds.

Proceeds from the revolver will be available for working capital and general corporate purposes.

And, proceeds from the delayed-draw term loan C will be used to purchase up to $400 million of Valor's outstanding bonds that may be tendered in connection with this merger transaction. It is currently anticipated that these bonds will not be put in connection with the transaction, which would then cancel out the need for the term loan C tranche, reducing the overall credit facility size.

Terex closes

Terex Corp. closed on its new $900 million credit facility (Ba3/BB) consisting of a $700 million revolver and a $200 million term loan B, according to a company news release.

The revolver is priced with an interest rate of Libor plus 125 basis points, and the term loan B is priced with an interest rate of Libor plus 175 basis points.

Credit Suisse, UBS and Citigroup acted as the lead banks on the deal, with Credit Suisse the left lead.

Proceeds from the term loan, along with cash on hand, were used to pay in full the company's approximately $229 million of existing senior term debt.

Terex is a Westport, Conn., manufacturer and seller of equipment primarily for construction, infrastructure and surface mining industries.

BWAY closes

BWAY Corp. closed on its new $295 million senior secured credit facility (Ba3/B+) consisting of a $190 million seven-year term loan B, a $50 million six-year revolver, a $5 million Canadian six-year revolver and a $50 million six-year term loan C, according to a company news release.

The term loan B is priced with an interest rate of Libor plus 175 bps, the tight end of original Libor plus 175 to 200 basis points talk, and the revolver, Canadian revolver and term loan C are all priced with an interest rate of Libor plus 200 basis points, the wide end of original Libor plus 175 to 200 basis points talk.

Deutsche Bank and JPMorgan acted as joint lead arrangers on the deal that was used to help fund the acquisition of Industrial Containers Ltd.'s plastic and steel general line pail business, and refinance BWAY's existing credit facility.

BWAY is an Atlanta-based manufacturer of steel and plastic containers for the general line.

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