Sabre up on litigation freeze; Travelport gains; Avaya bounces; Allied Security moves deadline

By Sara Rosenberg

New York, Jan. 25 - Sabre Holdings' term loan headed higher in trading on Tuesday on the back of news that litigation with American Airlines (AMR Corp.) has been put on hold, and Travelport Ltd.'s strip of extended debt moved up in sympathy.

In more trading happenings, Avaya Inc.'s term loan B-1 was stronger as the company held a call in the afternoon to launch an amendment and extension proposal. Its B-2, however, softened on the possibility of a paydown.

Moving to the primary market, Allied Security Holdings LLC accelerated the commitment deadline on its credit facility due to strong demand, and Compass Diversified Holdings set pricing on its term loan B at the tight end of talk and reduced the original issue discount.

Also, TowerCo upsized its term loan while firming price talk at the low end of guidance, and National Surgical Hospitals Inc. flexed pricing higher on its term loans while widening the discount.

In addition, Scitor Corp. and Kraton Polymers LLC released price talk on their loans, Rockwood Holdings Inc. and Revel Entertainment Group LLC launched their deals, and Axcan Holdings Inc. and Intelligrated Inc. disclosed that they will be coming to market shortly.

Sabre term loan rises

Sabre's term loan gained some ground in trading as the company announced late Monday that litigation with American Airlines is being pushed off until June 1, traders told Prospect News.

The two companies said that they will begin work shortly on reaching a new agreement and that both parties will return to operating as they were prior to Jan. 5 in terms of Sabre displays, American content and economic terms.

Following the news that the companies are now working on a resolution, Sabre's term loan was quoted by one trader at 94 1/8 bid, 94 5/8 offered, up from 91½ bid, 91¾ offered, and by a second trader wrapped around 94, up 2½ points on the day.

Sabre displays, fees an issue

According to American, on Jan. 5, Sabre revised its system display, making it more difficult for travel agents to find its fares, and doubled the fees it charges for bookings through its global distribution systems. Sabre also terminated portions of its global distribution systems agreements with American, effective in July.

Sabre alleged that its contract with American allowed it to take those actions in response to statements that American made in the press concerning its direct connection technology.

In response, on Jan. 10, American filed a lawsuit against Sabre. The court temporarily enjoined Sabre from making it more difficult to find the fares and set a preliminary injunction hearing for Feb. 14.

Sabre is a Southlake, Texas-based merchandiser and retailer of travel products and provider of distribution and technology services for the travel industry.

Travelport better, too

On the back of the Sabre news, Travelport, which is also involved in litigation and negotiation talks with American, saw its strip of extended institutional bank debt head upwards, traders remarked.

The Parsippany, N.J.-based travel distribution services company's strip was quoted by one trader at 97 3/8 bid, 97 7/8 offered, up from 96 3/8 bid, 96 7/8 offered, and by a second trader at 97½ bid, 98 offered, up about a point on the day.

In regards to Travelport, the company filed a lawsuit against American on Nov. 5 seeking a ruling that a notice of termination delivered to its Orbitz subsidiary breached American's content distribution agreement with Travelport.

Then, according to American on Dec. 2, Travelport doubled the booking fees it charges for some bookings and made it more difficult for agents to find American's fares on the Travelport system display.

In response, American filed counterclaims against Travelport for breach of contract.

Avaya B-1 strengthens

Avaya's term loan B-1 was better on Tuesday as the company held a 2 p.m. ET lender call to launch an amendment and extension of its bank debt, according to traders.

The term loan B-1 was quoted by one trader at 97¼ bid, 97½ offered, up from 96 ¾ bid, 97 offered, and by a second trader at 97¼ bid, 97 5/8 offered, up from 96¾ bid, 97 offered.

Under the proposal, the company is asking to extend 50% of its term loan B-1 to 2017 from 2014 and is offering pricing of Libor plus 425 basis points on the extended debt, compared to pricing of Libor plus 275 bps on the non-extended.

As of Sept. 30, there was $3.662 billion outstanding under the term loan B-1.

Citigroup, JPMorgan and Morgan Stanley are leading the transaction and are asking for responses by Feb. 1.

Avaya B-2 slides

On the flip side, Avaya's term loan B-2 was softer with the lender call, moving to par ½ bid, 101½ offered, from 101½ bid, 102¼ offered, as investors think that the debt could be getting paid down, the first trader added.

The repayment fears stem from another part of the amendment that would carve out a basket to allow for additional senior secured debt in the form of loans or bonds.

Avaya would have the option to use that additional debt to repay whichever term loan tranche it wants to first, and the expectation is that the term loan B-2 would be paid down first, then the B-1 and then the B-3, a source explained.

The source went on to say that he thinks the company is leaning towards doing a new bond deal.

Lenders are being offered a 10 bps amendment fee.

Avaya expected earnings

In connection with launching the credit facility amend and extend, Avaya announced expected results for its first quarter of fiscal 2011 ending Dec. 31.

The company anticipates revenue to be in the range of $1.36 billion to $1.37 billion, gross margin as a percentage of revenue to be about 50%, excluding the amortization of technology intangible assets and any other acquisition related adjustments, and adjusted EBITDA to be in the range of $215 million to $225 million.

The estimated cash balance as of Dec. 31 is about $460 million.

Avaya is a Basking Ridge, N.J.-based enterprise communications systems, software and services company.

Allied shutting early

Switching to the primary market, Allied Security moved the commitment deadline on its $660 million credit facility to 5 p.m. ET on Wednesday from Friday as the deal has seen a lot of investor interest since it launched with a conference call last Friday and even before that call took place, according to a market source.

There are "no changes yet" to the credit facility, the source remarked.

As launched, the deal consists of a $75 million five-year revolver (Ba3/B+), a $395 million six-year first-lien term loan (Ba3/B+) and a $190 million seven-year covenant-light second-lien term loan (B3/CCC+).

Allied price talk

Price talk on Allied Security's revolver and first-lien term loan is Libor plus 400 bps, and price talk on the second-lien is Libor plus 750 bps, with all tranches having a 1.5% Libor floor and offered at an original issue discount of 99.

There is call protection of 103 in year one, 102 in year two and 101 in year three on the second-lien loan.

Credit Suisse and Bank of America are the lead banks on the deal that will be used to refinance existing bank and mezzanine debt.

Allied Security is a Conshohocken, Pa.-based security services company.

Compass firms pricing

Compass Diversified Holdings finalized pricing on its two-times oversubscribed $200 million six-year last-out term loan B (B1/BB-) at Libor plus 425 bps, the low end of the Libor plus 425 bps to 475 bps talk, left the 1.5% floor intact and moved the original issue discount to 99 from 981/2, according to a market source.

The $525 million senior secured credit facility also includes a $325 million five-year revolver (Ba1) priced at Libor plus 325 bps, subject to a leverage grid that kicks in six months after close, with no Libor floor and upfront fees based on commitment size.

TD Securities, BMO and SunTrust are the lead arrangers on the deal, with TD the bookrunner, and proceeds will be used to refinance existing debt and for general corporate purposes.

Compass Diversified is a Westport, Conn.-based investment firm specializing in acquiring controlling stakes in small- to middle-market companies.

TowerCo upsizes

TowerCo lifted its six-year term loan to $400 million from $350 million and firmed pricing at Libor plus 375 basis points with a discount of 991/2, the tight end of the Libor plus 375 bps to 400 bps with a discount of 99 to 99½ talk, according to a market source.

The 1.5% Libor floor was left intact.

The company's now $440 million, up from $390 million, credit facility (BB-) also includes a $40 million four-year revolver.

Morgan Stanley, TD Securities and Fifth Third Bank are the lead banks on the deal that will be used to refinance existing debt and fund a dividend.

TowerCo, a Cary, N.C.-based owner and leaser of communication towers, is asking for commitments by noon ET on Thursday.

National Surgical tweaks

National Surgical Hospitals flexed pricing on its $170 million six-year term loan and $30 million six-year delayed-draw term loan to Libor plus 650 bps from Libor plus 550 bps and increased the discount to 98 from 99, while keeping the Libor floor at 1.75%, according to a market source.

Additionally, 101 hard call protection for one year was added to the funded term loan and the delayed-draw availability period was shortened to 18 months from two years, the source said.

Recommitments are due at noon ET on Wednesday.

The company's $220 million senior secured credit facility also includes a $20 million five-year revolver.

National Surgical buyout

Proceeds from National Surgical's credit facility will be used to help fund its acquisition by Irving Place Capital. There will be about 40% equity as part of the transaction.

At close, senior and total leverage will be around 4 times.

Jefferies is the lead bank on the credit facility.

National Surgical Hospitals is a Chicago-based owner, operator and developer of surgical hospitals and surgery centers in partnership with local physicians.

Scitor sets guidance

Scitor held a bank meeting on Tuesday morning to kick off syndication on its proposed credit facility, and in connection with the event, price talk on the term loan was announced, according to a market source.

The $275 million term loan was presented with talk of Libor plus 400 bps with a 1.5% Libor floor and an original issue discount of 99, the source said.

JPMorgan, Jefferies, GE Capital and RBC are the lead banks on the $305 million credit facility (B2/B), which also includes a $30 million revolver.

Proceeds will be used for a recapitalization.

Scitor is a provider of systems engineering, financial and management consulting, information services, and other services for corporate customers and government programs.

Kraton talk surfaces

Kraton Polymers came out with price talk of Libor plus 325 bps with no Libor floor on its $350 million five-year senior secured credit facility, as it too held a bank meeting in the morning, according to a market source.

The facility consists of a $150 million revolver that will be undawn at close and a $200 million term loan A.

Upfront fees are based on the size of an investor's commitment toward the revolver, the source remarked.

Specifically, $10 million or more towards the revolver will get a 3:1 ratio of term loan to revolver and 75bps on total allocation. And, investors will get the same 3:1 ratio for revolver commitments of less than $10 million, but will only get paid 50 bps on total allocation.

Kraton lead banks

Bank of America, Morgan Stanley, Goldman Sachs, Credit Suisse and Macquarie are the lead banks on Kraton's credit facility, with Bank of America the left lead.

Proceeds will be used, along with $200 million of eight-year senior unsecured notes, to refinance senior notes, discount notes and term loan debt due in 2013 and 2014.

Pro forma for the transaction, total senior secured debt to EBITDA will be 1.02 times and total debt to EBITDA will be 2.04 times.

Kraton Polymers is a Houston-based producer of styrenic block copolymers for use in industrial and consumer applications.

Rockwood launches

Also launching on Tuesday was Rockwood Holdings' $1.03 billion credit facility, consisting of a $180 million five-year revolver and an $850 million seven-year term loan.

As was previously reported, talk on both tranches is Libor plus 300 bps with a 1% Libor floor. The term loan is being offered at an original issue discount of 99½ and has 101 soft call protection for one year, and the revolver is being offered at 99 and has a 50 bps unused fee.

Credit Suisse is the lead bank on the deal that will be used, along with cash on hand, to refinance existing bank debt.

Pro forma for the transaction, total senior secured debt will be 2.0 times, and total debt will be 2.8 times.

Rockwood, a Princeton, N.J.-based specialty chemicals and advanced materials company, is seeking commitments by 5 p.m. ET on Feb. 4, with closing targeted for the week of Feb. 7.

Revel returns

Revel Entertainment was yet another deal to launch during the session, with its $850 million facility structured as a $700 million six-year first-lien term loan B and a $150 million 61/2-year second-lien term loan.

The first-lien term B is talked at Libor plus 800 bps and the second-lien loan is talked at Libor plus 1,100 bps, with both having a 2% Libor floor and call protection of non-callable for one year, then at 103 in year two, 102 in year three and 101 in year four. The first-lien is being offered with an original issue discount of 981/2, and the second-lien is being offered at 98.

JPMorgan is the lead bank on the gaming and entertainment company's deal that will be used to help fund the construction of a casino and hotel in Atlantic City, N.J.

Revel getting mez debt

Other funding for Revel's construction plans will come from mezzanine financing, which is something investors had been hoping for since the company first came to market in November.

Back then, Revel launched a $1.287 billion facility, consisting of an $800 million first-lien loan talked at Libor plus 700 bps with a 2% Libor floor and an original issue discount of 98 and a $472 million second-lien loan talked at 12.5% with a discount of 97. Later in the syndication process, pricing on the first-lien term changed to Libor plus 825 bps with a discount of 97, but investors still stood on the sidelines.

The first-lien loan was non-callable for one year, then at 103 in year two, 102 in year three and 101 in year four, while the second-lien was non-callable for three years, then at 106 in year four, 103 in year five and 101½ in year six.

The size of the newly restructured deal is reduced from the original amount because of the addition of the mezzanine.

Axcan readies deal

Axcan has set a bank meeting for Thursday morning to launch a proposed $340 million senior secured credit facility that consists of a $115 million amended and restated revolver and a $225 million six-year term loan, a market source said.

Initial pricing on extended revolver commitments due in 2016 is expected to be Libor plus 450 bps with a 75 bps unused fee, while pricing on the non-extended revolver due Feb. 25, 2014 will be Libor plus 350 bps with a 50 bps unused fee, according to an 8-K filed with the Securities and Exchange Commission on Tuesday.

Expected pricing and Libor floor on the term loan B is still to be determined, and the tranche will include 101 soft call protection for one year, the filing said.

Bank of America, RBC Capital Markets, HSBC Securities and Barclays Capital are the joint lead arrangers and bookrunners on the deal.

Axcan buying Eurand

Proceeds from Axcan's term loan, $225 million of secured notes, $145 million of equity and cash on hand will be used to fund the acquisition of Eurand NV for $12 per share, to repay Eurand's debt and to repay Axcan's outstanding term loan.

The amended and restated revolver will be used to replace the company's existing revolver. It is expected to primarily be undrawn at close.

Originally, the company had said that it received a commitment for a $445 million bridge loan for the acquisition and was planning to use $160 million of equity.

Axcan is a Quebec-based pharmaceutical company focused on the treatment of gastrointestinal disorders. Eurand is an Amsterdam-based specialty pharmaceutical company.

Intelligrated coming soon

Intelligrated is scheduled to hold a bank meeting on Thursday to launch a proposed $175 million credit facility, consisting of a $30 million five-year revolver and a $145 million six-year term loan B, according to a market source.

Bank of America is the lead bank on the deal.

Proceeds will be used to refinance an existing second-lien loan and fund a dividend payment.

Intelligrated is a Cincinnati-based provider of automated material handling systems.

Attachmate nets interest

In other news, syndication of Attachmate Corp.'s $1.09 billion senior secured credit facility is heard to be "going well" as the deal "benefits from an existing lender group," according to a market source.

Other positives working for the facility include the recent upgrade of the company's corporate rating by Moody's Investors Service to B2 from B3 and the revision of its outlook by Standard & Poor's to positive from stable, the source said.

And, the overall tone of the loan market is working in Attachmate's favor as well. "Without a lot of new issue there, people are looking to put money to work," the source added.

Attachmate facility details

As was already reported, Attachmate's facility consists of $40 million five-year revolver (B1/BB-) and an $825 million six-year first-lien term loan (B1/BB-), with both of these tranches talked at Libor plus 575 bps, and a $225 million 61/2-year second-lien term loan talked at Libor plus 950 bps. All tranches have a 1.75% Libor floor.

The first-lien term loan is being offered at 981/2, while the second-lien loan and the revolver are being offered at 98.

Additionally, the second lien is non-callable in the first year, then at 103 in year two, 102 in year three and 101 in year four.

Credit Suisse, RBC, Goldman Sachs and Citadel are the lead banks on the credit facility and are asking for commitments by Feb. 4.

Attachmate buying Novell

Proceeds from Attachmate's credit facility, along with $425 million of equity, will be used to fund the acquisition of Novell Inc. for $6.10 per share in cash in a transaction valued at $2.2 billion.

Novell has also entered into a definitive agreement for the concurrent sale of certain intellectual property assets to CPTN Holdings LLC, a consortium of technology companies organized by Microsoft Corp., for $450 million in cash. The cash payment is reflected in the price to be paid by Attachmate.

Closing on the acquisition is expected to occur in the first quarter, subject to regulatory approvals and clearance under the Hart-Scott-Rodino Act, the completion of the sale of assets to CPTN Holdings and approval by Novell's stockholders.

Attachmate is a Seattle-based provider of access and integration software for legacy systems. Novell is a Waltham, Mass.-based developer, seller and installer of enterprise software.

Exide Technologies closes

Exide Technologies closed on its $200 million five-year senior secured asset-based revolving credit facility on Tuesday, according to an 8-K filed with the SEC.

Wells Fargo acted as the lead arranger and a joint bookrunner with Deutsche Bank.

Pricing on the revolver can range from Libor plus 225 basis points to 275 bps based on availability. Initial pricing is Libor plus 250 bps.

Proceeds will be used for general corporate purposes.

Exide Technologies is a Milton, Ga.-based producer and recycler of lead-acid batteries.

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