AssuredPartners, Netsmart, CSRA break; Hertz, Valeant slide with earnings, slashed outlooks

By Sara Rosenberg

New York, Nov. 8 – AssuredPartners Inc. finalized the spread on its first-lien term loan at the high end of guidance and then the debt surfaced in the secondary market on Tuesday, and deals from Netsmart Technologies Inc. and CSRA Inc. began trading too.

In more secondary happenings, Hertz Global Holdings Inc.’s term loan softened as the company announced disappointing quarterly numbers and lowered full-year estimates, and Valeant Pharmaceuticals International Inc.’s term loans retreated on earnings news, reduced full-year guidance and ratings downgrades.

Returning to the primary market, Accuride Corp. downsized its term loan B and sweetened the call protection, Telesat Canada upsized its term loan B and Garda World Security Corp. firmed the original issue discount on its add-on first-lien term loan at the wide end of guidance.

Also, Strike LLC widened spread and original issue discount talk on its term loan B, and added a financial covenant, and PQ Corp. modified U.S. and euro term loan sizes and pricing and set issue prices at the tight end of talk.

Furthermore, Innovative XCessories & Services LLC released price talk on its loan deal with launch, and Hostess Holdco LLC and GlobalLogic joined this week’s new issue calendar.

AssuredPartners sets spread

AssuredPartners firmed pricing on its $926 million first-lien covenant-light term loan (B2) at Libor plus 425 basis points, the wide end of the Libor plus 400 bps to 425 bps talk, and left the 1% Libor floor and 101 soft call protection for six months unchanged, according to a market source.

As before, the first-lien term loan includes $60 million of add-on debt with an original issue discount of 99.5 and the remaining amount is a repricing of the company’s existing first-lien term loan with a par issue price.

Along with the first-lien term loan, the company is getting a $50 million incremental second-lien term loan (Caa2) priced in line with talk at Libor plus 900 bps with a 1% Libor floor and a discount of 99. This tranche has call protection of 102 through October 2017 and 101 for a year thereafter.

Bank of America Merrill Lynch, Morgan Stanley Senior Funding Inc., RBC Capital Markets LLC, Barclays, Macquarie Capital (USA) Inc. and BMO Capital Markets Corp. are leading the deal.

AssuredPartners frees up

With final terms in place, AssuredPartner’s bank debt broke for trading, with the first-lien term loan quoted at par bid, 100 3/8 offered, a trader added.

Proceeds from the incremental term loans will be used for acquisition activity and a revolver paydown, and the repricing will take the first-lien term loan down from Libor plus 475 bps with a 1% Libor floor.

AssuredPartners is a Lake Mary, Fla.-based provider of property and casualty and employee benefits insurance brokerage services.

CSRA starts trading

CSRA’s $466.3 million term loan B also made its way into the secondary market, with levels seen at 100 1/8 bid, 100 5/8 offered, a trader remarked.

Pricing on the loan is Libor plus 250 bps with a 0.75% Libor floor, and it was issued at par. The debt has 101 soft call protection for six months.

RBC Capital Markets LLC, MUFG, Bank of America Merrill Lynch and Scotiabank are leading the deal that is repricing an existing term loan B down from Libor plus 300 bps with a 0.75% Libor floor and extending the maturity by one year.

CSRA, formed through the combination of the North American Public Sector business of CSC and SRA International in 2015, is a Falls Church, Va.-based provider of IT solutions and professional services to U.S. federal and local government agencies.

Netsmart hits secondary

Netsmart Technologies’ $434 million term loan (B2) began trading in the morning, with levels quoted at 99¾ bid, 100¼ offered, a market source said.

The term loan, which includes a $40 million incremental tranche, is priced at Libor plus 450 bps with a 1% Libor floor. The incremental loan was issued at an original issue discount of 99.5 and the remainder was issued at par. All of the debt has 101 soft call protection for six months.

During syndication, pricing on the term loan was increased from Libor plus 425 bps.

Golub Capital is leading the deal.

The incremental term loan will fund a tuck-in acquisition and the rest will be used to reprice an existing term loan down from Libor plus 475 bps with a 1% Libor floor.

Netsmart is an Overland Park, Kan.-based IT company focused on health and human services.

Hertz retreats

Also in trading, Hertz’s term loan fell to 98½ bid, 99¼ offered from 100 3/8 bid, 100 ¾ offered with the release of third quarter numbers and downward revision of full-year estimates, according to a trader.

For the quarter, the company reported net income from continuing operations of $44 million, or $0.52 per diluted share, compared with net income from continuing operations of $217 million, or $2.38 per diluted share, during the same period last year.

Total revenues for the quarter were $2.54 billion, versus $2.58 billion in the previous year, and adjusted EBITDA was $329 million, compared to $430 million last year.

Regarding full-year estimates, the Estero, Fla.-based vehicle rental company is guiding adjusted earnings per share in the range of $0.51 to $0.88, revised from $2.75 to $3.50, and adjusted EBITDA in the range of $575 million to $625 million, modified from $850 million to $950 million.

“While we remain on pace to deliver $350 million of cost reduction in 2016, we fell short from a timing perspective on our internal stretch target for cost reduction. Considering this and the potential for an additional depreciation rate adjustment in the fourth quarter, we are updating our 2016 outlook and taking incremental actions to reduce costs and drive revenue,” added John Tague, president and chief executive officer, in a news release.

Valeant softens

Valeant’s term loans headed lower with the company’s third quarter earnings announcement, a reduction in the full-year outlook and ratings downgrades from Moody’s Investors Service, a trader said.

The term loan F was quoted at 98 bid, 98¾ offered, down from 99½ bid, 99 7/8 offered, and the term loan E was quoted at 98 3/8 bid, 99 1/8 offered, down from 99½ bid, 99 7/8 offered, the trader added.

For the quarter, the company reported a net loss of $1.22 billion, or $3.49 per share, versus net income of $49.5 million, or $0.14 per share, in the previous year.

Total revenues for the quarter were $2.48 billion, compared to $2.79 billion in the third quarter of 2015, and adjusted EBITDA was $1.16 billion, versus $1.47 billion last year.

As for the full-year outlook, adjusted earnings per shares estimates were lowered to between $5.30 to $5.50 from a previous range of $6.60 to $7.00, total revenues estimates were reduced to a range of $9.55 to $9.65 billion from a previous range of $9.9 to $10.1 billion, and adjusted EBITDA estimates were changed to a range of $4.25 to $4.35 billion from a previous range of $4.80 to $4.95 billion.

Valeant downgraded

Along with the earnings news on Tuesday, Moody’s downgraded Valeant’s corporate family rating to B3 from B2, senior secured bank credit facilities to Ba3 from Ba2 and senior unsecured debt to Caa1 from B3 (LGD 5).

Moody’ said the downgrades reflect Valeant’s challenges in turning around its specialty pharmaceuticals business, resulting in weak earnings trends and financial leverage remaining above earlier expectations.

Valeant is a Laval, Quebec-based specialty pharmaceutical company.

Accuride tweaks loan

Back in the primary market, Accuride cut its seven-year senior secured term loan B to $225 million from $235 million, pushed out the 101 soft call protection to one year from six months, removed the MFN sunset, reduced the incremental allowance, and increased the opening excess cash flow sweep to 75% from 50%, according to a market source.

Price talk on the term loan B remained at Libor plus 700 bps with a 1% Libor floor and an original issue discount of 97.

The company’s now $290 million credit facility also includes a $65 million five-year asset-based revolver.

RBC Capital Markets is leading the deal that will be used with equity and cash on hand to fund the buyout of the company by Crestview Partners for $2.58 per share in cash.

The equity amount was upsized with the term loan B downsizing, the source added.

Closing is expected in the fourth quarter, subject to customary conditions, including Accuride shareholder approval and antitrust approvals in the United States and Mexico.

Accuride is an Evansville, Ind.-based supplier of components to the commercial vehicle industries.

Telesat upsizes

Telesat Canada raised its seven-year term loan B to $2.43 billion from $2.18 billion as its bond offering was lowered to $500 million from $750 million, according to market sources.

Talk on the term loan B is Libor plus 375 bps to 400 bps with a 0.75% Libor floor, an original issue discount of 99 and 101 soft call protection for six months.

The company’s now $2.63 billion credit facility also includes a $200 million five-year revolver.

J.P. Morgan Securities LLC is leading the deal that will be used with the bonds to redeem notes, repay bank debt and fund a cash dividend to shareholders.

Telesat is an Ottawa-based fixed satellite services operator.

Garda sets OID

Garda World Security firmed the original issue discount on its non-fungible $125 million add-on first-lien term loan (B1/B/BB+) at 98, the wide end of the 98 to 98.5 talk, a market source said.

The loan is still priced at Libor plus 300 bps with a 1% Libor floor, and there is still 101 soft call protection for six months.

Macquarie Capital (USA) Inc. is leading the deal that will be used to pay down revolver borrowings and increase liquidity.

Garda is a Montreal-based provider of business solutions and security services.

Strike revised

Strike raised price talk on its $250 million six-year term loan B to Libor plus 800 bps from Libor plus 700 bps, modified original issue discount talk to a range of 97 to 98 from a range of 98 to 99, added a leverage covenant of 4.5 times with step-downs to the initially covenant-light loan, and increased amortization to 5% per annum from 1%, a market source remarked.

The term loan still has a 1% Libor floor and hard call protection of 102 in year one and 101 in year two.

In addition to the term loan B, the company is planning to get an up to $100 million letter-of-credit facility and a $100 million asset-based revolver.

Bank of America Merrill Lynch and BBVA are leading the deal that will be used to refinance existing bank debt and for working capital purposes.

Strike is a The Woodlands, Texas-based provider of pipeline, facilities, fabrication, maintenance and integrity services to companies.

PQ restructures

PQ Corp. reduced its U.S. term loan to $930 million from $950 million while raising pricing to Libor plus 425 bps from Libor plus 375 bps, and increased its euro term loan to €284 million from €265 million while lifting pricing to Euribor plus 400 bps from Euribor plus 375 bps, according to a market source.

Additionally, the issue price on the term loans finalized at par, the tight end of the 99.75 to par talk, the source said.

Both term loans still have a 1% floor and 101 soft call protection for six months.

J.P. Morgan Securities LLC, Citigroup Global Markets Inc. and Credit Suisse Securities (USA) LLC are leading the deal that will be used to reprice existing term loans down from Libor/Euribor plus 475 bps with a 1% floor and add to cash on hand.

PQ is a Malvern, Pa.-based producer of specialty inorganic performance chemicals and catalysts.

Innovative XCessories talk

In more primary happenings, Innovative XCessories held its bank meeting on Tuesday, launching its $400 million six-year term loan B (B) at talk of Libor plus 475 bps to 500 bps with a 1% Libor floor, an original issue discount of 99 and 101 soft call protection for one year, a market source remarked.

The company’s $428 million credit facility also includes a $28 million five-year revolver (BB-) split between an $18 million U.S. tranche and a $10 million-equivalent Canadian tranche.

Commitments are due on Nov. 22, the source added.

Jefferies Finance LLC is leading the deal that will be used to refinance existing debt and fund a shareholder distribution.

Pro forma net leverage is 3.9 times.

Innovative XCessories, an Olympus Partners portfolio company, is a Huntsville, Ala.-based provider of upfit services and accessories to the automotive aftermarket and original equipment manufacturers.

Hostess readies deal

Hostess set a lender call for 10:30 a.m. ET on Wednesday to launch an $83 million incremental covenant-light first-lien term loan due August 2022 and a repricing of its existing $916 million covenant-light first-lien term loan due August 2022, both talked at Libor plus 300 bps with a 1% Libor floor and 101 soft call protection for six months, according to a market source.

The incremental loan offered at an original issue discount of 99.5 and the repricing is offered at a par issue price, the source said.

Commitments are due on Nov. 16.

Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., UBS Investment Bank, Morgan Stanley Senior Funding Inc. and RBC Capital Markets are leading the deal (BB-).

The incremental term loan will be used to refinance remaining second-lien debt, and the repricing will take the existing first-lien term loan down from Libor plus 350 bps with a 1% Libor floor.

Hostess is a Kansas City, Mo.-based sweet baked goods company.

GlobalLogic on deck

GlobalLogic will hold a lender meeting on Thursday to launch a $300 million term loan B, a market source remarked.

J.P. Morgan Securities LLC is leading the deal that will be used to refinance bank debt and PIK notes, the source added.

GlobalLogic is a California-based provider of software R&D services.

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