Computer Sciences frees to trade; MGM Resorts gains on REIT news; First Eagle revises loan

By Sara Rosenberg

New York, Oct. 29 – Computer Sciences Government Services Inc.’s credit facility made its way into the secondary market on Thursday, with its term loan B seen trading above its original issue discount, and MGM Resorts International’s term loan B strengthened as the company announced plans to create a real estate investment trust.

Switching to the primary market, First Eagle Investment Management Inc. lifted pricing on its term loan B, widened the issue price and sweetened the call protection.

In addition, Shearer’s Foods LLC released price talk on its term loan with launch, and NXP BV and LPL Financial Holdings Inc. joined the near-term new issue calendar.

Computer Sciences breaks

Computer Sciences Government Services’ credit facility began trading on Thursday, with the $750 million seven-year covenant-light term loan B quoted at par 1/8 bid, par 3/8 offered, according to a trader.

Pricing on the term loan B is Libor plus 300 basis points with a step-down to Libor plus 275 bps when total net leverage is 2.5 times and a 0.75% Libor floor. The debt has 101 soft call protection for one year and was sold at an original issue discount of 99.5.

Recently, the term loan B size firmed from revised talk of up to $1 billion and an initial size of $1.25 billion, the spread finalized at the low end of the Libor plus 300 bps to 325 bps talk, the step-down was added, the call protection was extended from six months and the MFN sunset provision was removed.

The company’s $3.5 billion senior secured credit facility (Ba2/BB+/BBB) also includes a $700 million five-year revolver priced at Libor plus 175 bps, a $600 million three-year term loan A-1 priced at Libor plus 162.5 bps and a $1.45 billion five-year term loan A-2 priced at Libor plus 175 bps.

When the term loan B was downsized, the revolver was upsized from $500 million, the term loan A-1 was increased from $500 million and the term loan A-2 was lifted from $1.25 billion.

Computer Sciences lead banks

RBC Capital Markets LLC, Mitsubishi UFJ Financial Group, Bank of America Merrill Lynch and Scotiabank are leading Computer Sciences Government Services’ credit facility, with RBC left lead on the term loan B and Mitsubishi left lead on the revolver and term A debt.

Proceeds will be used to fund the $10.50 per share special cash dividend being paid in the spinoff of Computer Sciences Government Services from Computer Sciences Corp., to finance the $390 million acquisition of SRA by Computer Sciences Government Services from Providence Equity Partners and SRA’s founder, Ernst Volgenau, as well as members of its management team, and to refinance SRA’s existing $1 billion of net debt.

At close, total net leverage will be 3.1 times.

Computer Sciences Government Services is a Falls Church, Va., provider of IT services to the U.S. federal government. SRA is a Fairfax, Va.-based provider of IT and professional services to the U.S. federal government.

MGM Resorts trades up

Also in trading, MGM Resorts’ term loan B rose to 99¾ bid, par ¼ offered from 98¾ bid, 99¼ offered after the company said that it is creating a controlled real estate investment trust, a trader said.

The REIT, to be named MGM Growth Properties LLC, will received real estate associated with ten of MGM Resorts’ premier properties and will assume about $4 billion of debt, which is expected to be refinanced with the proceeds of debt and equity issuances.

“This transaction provides MGM Resorts’ shareholders numerous strategic and financial benefits, including delevering our balance sheet and enhancing long-term shareholder value,” said Jim Murren, chairman and chief executive officer of MGM Resorts, in a news release.

Closing is expected in the first quarter of 2016, subject to market conditions, required regulatory approvals, completion of the related financings and SEC review, and other customary conditions.

MGM Resorts is a Las Vegas-based hospitality company.

First Eagle reworks deal

Moving to the primary market, First Eagle Investment Management raised pricing on its $1.35 billion seven-year covenant-light term loan B to Libor plus 400 bps from talk of Libor plus 350 bps to 375 bps, changed the original issue discount to 98 from 99 and extended the 101 soft call protection to one year from six months, according to a market source.

Additionally, the MFN sunset was eliminated, the incremental free and clear was reduced and the excess cash flow sweep was tightened, the source said.

As before, the term loan has a 0.75% Libor floor.

The company’s $1.5 billion senior secured credit facility (Ba1/BB+) also includes a $150 million five-year revolver.

Recommitments are due at 10 a.m. ET on Friday, the source added. Allocations are expected thereafter.

First Eagle being acquired

Proceeds from First Eagle’s credit facility will be used to help fund its buyout by Blackstone and Corsair Capital from TA Associates for a total enterprise value of about $4 billion.

Morgan Stanley Senior Funding Inc., HSBC Securities Inc., Bank of America Merrill Lynch, Citigroup Global Markets Inc. and UBS AG are leading the debt.

Closing is expected in the fourth quarter, subject to receipt of consent by both First Eagle’s mutual fund board and fund shareholders, as well as customary regulatory approvals.

First Eagle is a New York-based independent, privately held asset management firm.

Shearer’s discloses talk

Shearer’s Foods held its bank meeting on Thursday, launching its $225 million incremental first-lien term loan (B1/B) with talk of Libor plus 375 bps with a 1% Libor floor, an original issue discount of 99 and 101 soft call protection for six months, a market source said.

Commitments are due on Nov. 12, the source added.

Antares Capital and Golub Capital are leading the deal that will be used to fund the acquisition of Barrel O’ Fun Snack Foods Corp.

As part of the acquisition financing, Ontario Teachers’ Pension Plan, the current owner of about 85% of Shearer’s, will be investing around $175 million of new equity into the company.

Shearer’s Foods is Massillon, Ohio-based private label supplier and contract manufacturer of salty snacks, cookies and crackers. Barrel O’ Fun is a Perham, Minn.-based supplier and contract manufacturer of salty snacks.

NXP on deck

NXP set a lender call for 10:45 a.m. ET on Friday to launch a $2.7 billion five-year term loan B (BBB-) that is talked at Libor plus 325 bps with a 0.75% Libor floor, an original issue discount of 99 and 101 soft call protection for six months, according to a market source.

Commitments are due on Nov. 5, the source said.

Credit Suisse Securities (USA) LLC, Morgan Stanley Senior Funding Inc., Barclays, Deutsche Bank Securities Inc., and Bank of America Merrill Lynch are leading the deal that will be used to help fund the acquisition of Freescale Semiconductor Ltd. for $6.25 in cash and 0.3521 of an NXP ordinary share for each Freescale common share held at the close of the transaction.

The purchase price implies a total equity value for Freescale of about $11.8 billion and a total enterprise value of around $16.7 billion including Freescale’s net debt.

Closing is expected this year, subject to regulatory approvals in various jurisdictions and customary conditions, as well as the approval of NXP and Freescale shareholders.

Eindhoven, Netherlands-based NXP and Austin, Texas-based Freescale are semiconductor companies.

LPL readies deal

LPL Financial scheduled a lender call for Tuesday to launch a $700 million incremental term loan, sources said.

J.P. Morgan Securities LLC is leading the loan that will be used to fund a share repurchase, repay revolver borrowings and for general corporate purposes.

In addition, the company is seeking an amendment to its existing credit facility to provide for the new debt, to extend the maturity of the roughly $1.06 billion term loan B to March 2021 from March 2019 and to modify the restricted payment provisions to enable execution of the full amount of the company’s newly increased $500 million share repurchase authorization.

LPL Financial is a Boston-based investment company.

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