Dollar Tree books close early; Arch Coal trades higher on earnings; Sabre sets talk on term loan

By Paul A. Harris

Portland, Ore., Feb. 4 – The LCDX 22 index of bank loan credit default swaps ended the Wednesday session down an eighth at 101 7/8 bid, 102 7/8 offered, according to a hedge fund manager.

Cash loans were flat on the day, according to a trader.

The Arch Coal, Inc. loan gained momentum after the company reported on Tuesday that its revenues grew and its losses narrowed during the fourth quarter of last year versus the fourth quarter of 2013.

Arch Coal's loan started week wrapped around 70 bid, then went as high as 75 bid, 76 offered in the wake of the report, the trader said.

Late Wednesday, it was well off those highs at 74 bid, the source added.

Meanwhile, books closed early and pricing tightened for the massive Dollar Tree Inc. $5.2 billion seven-year term loan B, which is going very well the trader said.

And Sabre Industries Inc. talked its $255 million seven-year covenant-light term loan at Libor plus 500 bps to 525 basis points with a 1% Floor at an original issue discount of 99.

Dollar Tree update

Dollar Tree tightened pricing on its $5.2 billion seven-year term loan B and closed the books early.

The Libor spread was revised to 375 basis points from earlier spread talk of 375 bps to 400 bps.

The 0.75% Libor floor, the original issue discount of 99 and the 101 six-month soft call protection were left unchanged.

Timing was accelerated, with the books closing at Wednesday's close, whereas they previously had been expected to remain open into Thursday.

“Everybody is focused on this deal,” said the trader, adding that it could be playing to sizable demand from CLOs.

Whisper on Dollar Tree's concurrent $2.5 billion of eight-year senior notes tightened during the Wednesday session, sources said. It began the day in the mid-6% yield context, then tightened to 6% to 6¼%.

“Now they appear to be targeting 6% on the bonds,” said the loan trader.

The company’s $6.95 billion credit facility also includes a $1.25 billion five-year revolver and a $500 million five-year term loan A.

J.P. Morgan Securities LLC, Wells Fargo Securities LLC, Bank of America Merrill Lynch, RBC Capital Markets LLC and U.S. Bank are the leads on the deal.

Proceeds will be used to help fund the acquisition of Family Dollar Stores Inc. in a cash and stock deal valued at $8.5 billion.

Under the agreement, Family Dollar shareholders will receive $74.50 per share, comprised of $59.60 in cash and $14.90 in Dollar Tree stock, subject to a collar.

The financing is expected to be completed in February.

Family Dollar stockholders already approved the transaction but the acquisition remains subject to approval by the Federal Trade Commission. Dollar Tree has made a divestiture proposal to the FTC and anticipates reaching an agreement with the FTC staff as to the specific number and locations of stores for divestiture by the end of January.

Closing of the Family Dollar acquisition could occur as soon as March.

Dollar Tree is a Chesapeake, Va.-based discount store operator. Family Dollar is a Matthews, N.C.-based chain of discount stores.

Suzo-Happ price talk

Suzo-Happ set price talk for a non-rated €165 million term loan in the Euribor plus 525 basis points area at a to-be-determined reoffer price and with an all-in yield of 6½% to 6¾% on Wednesday, according to a market source.

Commitments are due on Feb. 18.

The term loan features a 1% Euribor floor and 101 soft call protection for 12 months.

The €185 million credit facility, via bookrunner Barclays, also features a €20 million five-year revolver.

Proceeds will be used to fund the acquisition of Malmo, Sweden-based cash processing technology services provider Scan Coin AB and to refinance debt.

The borrowing entities are Happ Acquisition, Inc., along with Sweden Newco and Global Investments Holding BV (Netherlands).

Suzo-Happ is a Mount Prospect, Ill.-based provider of coin and currency handling and gaming services, components and distribution.

The sponsor is Acon Investments.

IPC deepens discount

IPC Corp. deepened the discount on its downsized $305 million seven-year second-lien covenant-light term loan to 92 from 95.5, according to a market source.

Books were scheduled to close late Wednesday.

The deal was previously downsized from $345 million.

The 950 basis points Libor spread and 1% Libor floor remain unchanged, as does the call protection. The loan is non-callable for one year, then at 103 in year two and 101 in year three.

The $925 million credit facility also features a 6½-year first-lien term loan that was previously upsized to $595 million from $555 million.

Pricing on the first-lien term loan is Libor plus 550 basis points with a 1% Libor floor and an original issue discount of 97. The first-lien term loan has 101 soft call protection for one year.

Earlier in syndication, pricing on the first-lien term loan was lifted from Libor plus 475 bps, the discount widened from 99, call protection was extended from six months, the maturity was shortened from seven years and a net first-lien maintenance covenant was added to the originally covenant-light tranche.

Also, pricing on the second-lien term loan was earlier raised from Libor plus 850 bps, the discount was revised from 98½, the call protection was sweetened from 102 in year one and 101 in year two and the maturity was shortened from eight years.

Other earlier changes included eliminating the 12-month MFN sunset provision from both term loans, increasing the excess cash flow sweep to 75% with step-down from 50% with step-downs and reworking the unlimited amount provision under the incremental allowance.

The facility also provides for a $25 million five-year revolver (B1/B).

Barclays and Credit Suisse Securities (USA) LLC are the bookrunners on the deal.

Proceeds will be used to help fund the buyout of the company by Centerbridge Partners LP from Silver Lake Partners for about $1.2 billion.

IPC is a Jersey City, N.J.-based provider of mission-critical network services and trading communication technology to the financial markets community.

DBRS sets bank meeting

Toronto-based credit ratings agency DBRS, borrowing via newly formed U.S. and Canadian entities, will kick off a $250 million seven-year first-lien covenant-light term loan at a Thursday bank meeting, according to a market source.

Commitments are due on Feb. 19.

Credit Suisse Securities (USA) LLC is leading the deal.

Pricing and credit ratings remain to be determined.

The $300 million facility also features a $50 million five-year revolver.

Proceeds will be used to fund the LBO by Carlyle Group and Warburg Pincus.

Sabre price talk

Sabre Industries’ $320 million credit facility also includes a $65 million revolver.

BNP Paribas Securities Corp., Citizens Financial Group and SunTrust Robinson Humphrey Inc. are the leads on the deal.

Proceeds will be used to refinance existing debt and fund an acquisition.

Sabre is an Alvarado, Texas-based turnkey provider of engineered structures and related services for the electric transmission & distribution and wireless communications end-markets.

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