Heinz grabs market focus; EMG Utica spread talk tightens; U.S. Shipping term loan B eyed

By Paul A. Harris

Portland, Ore., March 25 - The LCDX 19 bank loan CDS index traded flat on the day, according to a trader, who marked it at 102¼ bid, 102¾ offered late in the Monday session.

The market is focused on the H.J. Heinz Co. $9.5 billion term loans B-1 and B-2, which are expected to allocate on Wednesday, the trader added, noting that the word in the market is that the deal is playing to $17 billion of orders.

The deal is set to allocate on Wednesday.

Elsewhere EMG Utica LLC tightened spread talk and trimmed the original issue discount on its $325 million seven-year senior secured term loan (B2), decreasing it to 375 basis points from 450 bps.

And a bank meeting is scheduled for Wednesday to discuss the proposed U.S. Shipping Corp. $220 million five-year senior secured term loan B.

Heinz to allocate Wednesday

Heinz's $9.5 billion of term loans are set to allocate on Wednesday, according to a trader, who said that the deal is a blowout and is playing to $17 billion of orders.

As reported, Heinz reduced pricing on its six-year term loan B-1 to Libor plus 225 bps from talk of Libor plus 275 bps to 300 bps and on its seven-year term loan B-2 to Libor plus 250 bps from talk of Libor plus 275 bps to 300 bps, according to a market source.

Also, both term loans saw the addition of a 25 bps step-down when net first-lien leverage is less than 2.1 times, the source said. At close, net first-lien leverage will be 3.1 times.

The term loan B-1 still has a 1% Libor floor, an original issue discount of 99½ and 101 soft call protection for one year.

Meanwhile, the term loan B-2 saw its original issue discount talk move to 99½ to 99¾ from just 991/2, the source continued.

The B-2 loan continues to have a 1% Libor floor and 101 soft call protection for two years.

Furthermore, the total amount of term loan B-1 and B-2 was reduced to $9.5 billion from $10.5 billion as the company upsized its senior secured second-lien notes offering to $3.1 billion from $2.1 billion.

In addition to the term loans, the company's now $11.5 billion senior secured credit facility (Ba2/BB/BB+), down from $12 billion, includes a $2 billion revolver that was upsized from $1.5 billion.

At launch, the company was planning on getting $8.5 billion of U.S. term loan B-1 and B-2 debt, $1.4 billion euro equivalent in six-year term loan B-1 and seven-year term loan B-2 debt, and up to $600 million in sterling-denominated six-year term loan B-1 and seven-year term loan B-2.

However, it was recently announced that the company would not be pursuing the euro and sterling loans and instead would move those funds into the U.S. loans to get a 100% U.S. dollar capital structure.

The euro and sterling B-1 and B-2 loans were talked at Libor plus 300 bps to 325 bps with a 1% Libor floor and an original issue discount of 991/2. There was 101 soft call protection for one year on the B-1 tranche and soft call protection of 101 for two years on the B-2 tranche.

J.P. Morgan Securities LLC, Well Fargo Securities LLC, Barclays and Citigroup Global Markets Inc. are the arrangers on the deal.

Proceeds will be used to help fund the company's buyout by Berkshire Hathaway and 3G Capital for $72.50 in cash per share. The deal, which includes the assumption of Heinz's outstanding debt, is valued at about $28 billion.

Other funds for the transaction will come from $16.24 billion of equity.

Utica tightens talk

EMG Utica tightened spread talk and trimmed the original issue discount on its $325 million seven-year senior secured term loan (B2).

The Libor spread was decreased to 375 bps from 450 bps. The Libor floor was decreased to 100 bps from 125 bps. Discount talk was revised to move the original issue discount to 99.50 from 99, decreasing it by 50 cents.

The loan has 101 repricing protection for one year, the source said.

Commitments were due by the Monday close.

Credit Suisse Securities (USA) LLC and Citigroup are the lead banks on the deal.

Covenants include maximum leverage and interest coverage ratios, the source said.

Proceeds will be used to help fund growth capital expenditures associated with the development of the EMG Utica joint venture and to pre-fund interest during the construction period.

Other funds will come from over $650 million of equity.

EMG Utica is a joint venture between the Energy & Minerals Group and MarkWest Energy Partners LP that will develop midstream infrastructure on behalf of natural gas producers operating throughout the liquids-rich Utica Shale formation in Ohio.

U.S. Shipping shops term loan

A bank meeting is scheduled for 10 a.m. ET on Wednesday to discuss the proposed U.S. Shipping $220 million five-year senior secured term loan B, according to an informed source.

UBS Securities LLC is the left lead. BofA Merrill Lynch is the joint bookrunner.

The deal comes with 1% per annum amortization.

Spread and pricing remain to be determined.

The Edison, N.J.-based provider of long-haul marine transportation services plans to use the proceeds to refinance debt.

Rovi call set for Tuesday

A lender call is scheduled for 2 p.m. ET on Tuesday to discuss the proposed refinancing of Rovi Corp.'s $540 million Libor plus 300 bps term loan due in March 2019 (existing ratings Ba2/BB), according to a market source.

The deal, which is being managed by JPMorgan, would reduce the Libor spread to between 250 bps and 275 bps. It would also cut the Libor floor to 75 bps from 100 bps.

The loan is being offered at an original issue discount of 99.75.

The existing loan, which features a six-month 101 soft call, was syndicated in March 2012. The company brought the loan to refinance debt and to put cash on its balance sheet.

Rovi is a Santa Clara, Calif.-based provider of digital entertainment solutions, including interactive program guides, licensing technology, media recognition technology and content protection.

Steward meeting Wednesday

A lender meeting is scheduled for 10 a.m. ET on Wednesday to discuss the Steward Health Care System LLC $250 million seven-year term loan B, according to a market source.

JPMorgan is leading the deal.

Pricing and credit ratings remain to be determined.

The Boston-based health care system plans to use the proceeds to refinance ABL borrowings, pre-fund acquisitions and fund capital expenditures.

TI Group upsizes

TI Group Automotive LLC upsized its six-year Libor plus 425 bps term loan B to $900 million from $850 million and priced the deal at 99, a market source said on Monday.

The Libor spread came 25 bps inside of the Libor plus 450 bps to 475 bps spread talk.

The loan has 101 soft call protection for one year.

In addition to the term loan B, the company's credit facility also includes a $100 million five-year ABL revolver.

JPMorgan is the lead bank on the deal.

Proceeds will be used to refinance an existing term loan B and to fund a one-time dividend.

TI Group is an Auburn Hills, Mich.-based automotive supplier with a focus on fluid storage, transfer and delivery technology.

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