Valeant, Blue Coat break; Caesars rises with amendment tweaks; Cequel accelerates deadline

By Sara Rosenberg

New York, Feb. 8 - Valeant Pharmaceuticals International Inc.'s term loan B freed up for trading on Wednesday, with levels seen above its original issue discount price, and Blue Coat Systems Inc. broke too.

Also in the secondary market, Caesars Entertainment Operating Co. Inc.'s non-extended term loans were stronger after the company made some investor-friendly revisions to its amendment and extension offer.

Switching to the primary, Cequel Communications Holdings I LLC moved up the commitment deadline on its term loan by one day due to strong demand.

Furthermore, International Lease Finance Corp., Tropicana Entertainment Inc. and Community Health Systems Inc. came out with price talk as their deals were presented to lenders during the session, and Milacron LLC surfaced with incremental loan plans.

Valeant trades atop OID

Valeant Pharmaceuticals' $600 million seven-year term loan B (Ba1/BBB-) emerged in the secondary market on Wednesday afternoon, with levels quoted at 99 7/8 bid, par 3/8 offered, according to a trader.

The loan is priced at Libor plus 275 basis points with a 1% Libor floor, and it was sold at an original issue discount of 991/2. There is 101 soft call protection for one year.

During syndication, the tranche was upsized from $500 million, the spread was lowered from Libor plus 300 bps and the discount tightened from 99.

J.P. Morgan Securities LLC, Goldman Sachs & Co. and Morgan Stanley & Co. LLC are the lead banks on the deal that will be used to repay borrowings under the company's $275 million revolver and for general corporate purposes, including acquisitions.

Valeant, a Mississauga, Ont.-based specialty pharmaceutical company, expects to close on the loan this month.

Blue Coat frees up

Blue Coat's credit facility began trading as well, with the $360 million first-lien term loan (B1/BB-) quoted at 98½ bid, 99½ offered and the $115 million second-lien term loan (Caa1/B-) quoted at 99 bid, according to a trader.

Pricing on the first-lien term loan firmed in line with initial talk at Libor plus 600 bps with a 1.5% Libor floor, and the debt was sold at an original issue discount of 98. There is 101 soft call protection for one year.

Second-lien loan pricing is Libor plus 1,000 bps with a 1.5% Libor floor, and it was sold at 97 after firming last week at the wide end of the 97 to 98 talk. The tranche, which was upsized from $85 million, has hard call protection of 103 in year one, 102 in year two and 101 in year three.

The company's $525 million senior secured credit facility also includes a $50 million revolver (B1/BB-).

Blue Coat being acquired

Proceeds from Blue Coat's credit facility and roughly $505 million of equity will be used to fund the buyout of the company by Thoma Bravo LLC and Ontario Teachers' Pension Plan for $25.81 in cash per share. The transaction is valued at roughly $1.3 billion.

The equity was reduced from around $520 million and more cash is being added to the balance sheet as a result of the second-lien upsizing.

Closing is expected this quarter, subject to customary conditions, including regulatory and shareholder approvals.

Jefferies & Co. is the lead bank on the credit facility.

Total leverage is around 3.75 times.

Blue Coat is a Sunnyvale, Calif.-based provider of web security and WAN optimization services.

Caesars strengthens

Caesars Entertainment's non-extended term loans B-1, B-2 and B-3 headed higher in trading after news hit that the company sweetened its credit facility amendment and extension proposal, according to a trader.

The non-extended loans were quoted at 92½ bid, 93¼ offered, up from 91¼ bid, 91 7/8 offered, the trader said.

Under the changes, the company is now looking to extend $2.5 billion of the B-1, B-2 and B-3 debt by three years to Jan. 28, 2018, instead of extending up to $4 billion of the debt, and pricing on the newly created extended term loan B-6 is proposed at Libor plus 525 bps, a source told Prospect News.

Initial talk on the B-6 had been Libor plus 450 bps if less than $3.25 billion was extended and Libor plus 475 bps if more than $3.25 billion was extended.

Current pricing on the roughly $5 billion of non-extended term loans is Libor plus 300 bps, and the company already has from an earlier transaction about $1.2 billion in existing extended term loans due Jan. 28, 2018 that are priced at Libor plus 425 bps.

Caesars' springing maturity

Additionally, Caesars is now offering a springing maturity on the term loan B-6, under which the tranche will come due inn April 2017 if the company's senior secured notes due 2017 are not refinanced by that time, the source remarked.

On top of the term loan extension, the company is seeking to convert original maturity revolver commitments to extended term loans, and the extension of commitments that are not converted by three years to Jan. 28, 2017 at increased pricing.

The company will repay extended term loans held by any consenting revolver lender in an amount equal to 10% of the amount of the revolver commitment that was converted, and 20% of extended revolver commitments will be terminated on a pro rata basis.

The revolver is currently sized at about $1.2 billion and priced at Libor plus 300 bps with a 50 bps unused fee.

Caesars selling notes

Along with the amend and extend, Caesars is issuing $1.25 billion of senior notes and using up to $1 billion of the proceeds to repay a portion of the term loans held by extending lenders in the following order: non-extended B-1, B-2 and B-3 borrowings held by extending lenders would be repaid first, followed by the repayment of extended term loans.

The notes are expected to price on Thursday and are talked in the 8.5% area.

Commitments towards the extended term loan and the amendment are due on Thursday as well.

Bank of America Merrill Lynch is the lead bank on the deal.

Caesars, a Las Vegas-based diversified casino-entertainment company, is offering lenders a 10 bps consent fee and a 15 bps extension fee.

Cequel shutting early

In more happenings, Cequel Communications accelerated the commitment deadline on its $2.2 billion seven-year term loan B to the end of day Wednesday from Thursday as a result of strong oversubscription, according to sources.

The B loan is talked at Libor plus 325 bps with a 1% Libor floor, an original issue discount of 99 and 101 soft call protection for one year.

The company's $2.7 billion senior secured credit facility (Ba2/BB-) also includes a $500 million five-year revolver talked at Libor plus 250 bps with no Libor floor.

Credit Suisse Securities (USA) LLC, Goldman Sachs & Co., J.P. Morgan Securities LLC, Bank of America Merrill Lynch and RBC Capital Markets LLC are leading the deal that will be used to refinance existing debt and fund a dividend.

Cequel, a St. Louis-based cable operator, will have secured leverage of 3.1 times and total leverage of 5.6 times.

International Lease guidance

Also on the new deal front, International Lease Finance held a bank meeting on Wednesday afternoon to kick off syndication on its $900 million senior secured term loan (Ba3/BBB-), at which time, price talk was announced, according to a market source.

The loan is guided at Libor plus 350 bps to 375 bps with a 1% Libor floor and an original issue discount of 991/2, and includes 101 soft call protection for one year, the source said.

Bank of America Merrill Lynch, Deutsche Bank Securities Inc., UBS Securities LLC and RBC Capital Markets LLC are the lead banks on the deal that will be used to repay some outstanding debt, including revolver borrowings, and for general corporate purposes.

International Lease, a Los Angeles-based independent aircraft lessor, is seeking commitments by Feb. 15.

Tropicana talk emerges

Another company to come out with price talk was Tropicana Entertainment as it launched its $175 million six-year first-lien term loan B in the morning, according to a market source.

The B loan is being shopped at Libor plus 600 bps with a 1.5% Libor floor and an original issue discount of 98, and includes 101 soft call protection for one year, the source said.

Commitments are due on Feb. 22, with allocations expected the week of Feb. 27 and closing expected in mid-March, the company disclosed in an 8-K filed with the Securities and Exchange Commission.

UBS Securities LLC is the lead bank on the deal that will be used to refinance an existing $105 million term loan and add cash to the balance sheet.

Tropicana, a Las Vegas-based owner and operator of casino gaming properties, will have total leverage of around 2.2. times.

Community Health pricing

Community Health Systems launched as well, setting price talk on its $1.2 billion credit facility (Ba3) at Libor plus 250 bps, according to a market source.

The facility consists of a $700 million revolver that has a 50 bps unused fee and a $500 million term loan A, the source said.

Credit Suisse Securities (USA) LLC is the lead bank on the deal that will be used to repay some non-extended term loan debt.

Community Health is a Nashville, Tenn.-based operator of hospitals.

Microsemi launches

Microsemi Corp. held its call on Wednesday to launch an $810 million term loan B that will reprice its existing $798 million term loan B, and the expectation is that there won't be any issues getting the transaction done, according to a market source.

"Too early for any real color on progress [but] the last repricing [done] for them was 100% roll and this has always traded well," the source said.

"If a holder elects to fall away they will be replaced by new investors," the source added.

Investors are being offered 100 basis points to rollover their commitments, and those who want to sell out of their positions will be paid out at 101.

Morgan Stanley Senior Funding Inc. is the lead bank on the deal.

Microsemi price talk

As was previously reported, Microsemi is guiding it repriced term loan B at Libor plus 300 bps to 325 bps with a 1% Libor floor, and the tranche will have 101 soft call protection for one year.

By comparison, current pricing on the term loan B is Libor plus 450 bps with a 1.25% Libor floor.

The slight increase in the loan size that is being done with the repricing is to cover related fees.

In March 2011, the company had actually completed a repricing transaction, under which the spread on its then $375 million term loan B was lowered to Libor plus 300 bps with a 1% floor from Libor plus 350 bps with a 1.5% floor. However, later in the year, the company obtained a new $800 million B loan to repay the existing debt and fund the acquisition of Zarlink Semiconductor Inc. and, as a result, pricing moved to the current level.

Microsemi is an Aliso Viejo, Calif.-based provider of semiconductor services.

Milacron readies add-on

Milacron has scheduled a conference call for Thursday to launch a proposed $50 million add-on term loan that is talked at Libor plus 600 bps with a 1.5% Libor floor, which matches existing term loan pricing, according to a market source.

Bank of America Merrill Lynch is the lead bank on the deal that will be used to fund a dividend.

Milacron is a Cincinnati-based company involved in plastics-processing technologies, metalworking fluids and precision machining.

Mohegan well met

Mohegan Tribal Gaming Authority's $225 million last-out, first-loss term loan is oversubscribed at initial terms that call for pricing of Libor plus 750 bps with a 1.5% Libor floor and a discount of 98, according to a market source. The loan is non-callable for two years, then at par.

In addition, the company is seeking a $200 million revolver due March 31, 2015 and a $275 million term loan A due March 31, 2015, with pricing on the tranches expected to range from Libor plus 350 bps to 450 bps, based on leverage. The revolver unused fees will range from 25 bps to 50 bps.

Wells Fargo Securities LLC, Bank of America Merrill Lynch and Credit Suisse Securities (USA) LLC are leading the deal, with Wells Fargo the left lead on the last-out loan and Bank of America the left lead on the pro rata.

The new bank debt is being done in connection with the company's private par exchange offers supported by a bondholder group holding about $598 million principal amount of its notes. The financing would be used to refinance an existing credit facility.

Mohegan is an Uncasville, Conn., operator of gaming and entertainment enterprises.

Tronox closes

Tronox Inc. closed on its $700 million six-year financing (Ba2/BB+) that consists of a $550 million funded term loan and a $150 million six-month delayed-draw term loan, according to a news release.

Pricing on the loans is Libor plus 325 bps with a 1% Libor floor, and they were sold at an original issue discount of 99. There is 101 soft call protection for one year.

During syndication, the funded term loan was upsized from $425 million, the delayed-draw loan was upsized from $125 million and pricing was reduced from Libor plus 375 bps.

Goldman Sachs & Co. and Deutsche Bank Securities Inc. led the deal that was used to refinance existing senior term loan borrowings and for general corporate purposes.

Tronox is an Oklahoma City-based producer and marketer of titanium dioxide pigment.

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