American General unveils $2 billion loan; Securus sets talk; Harvard Drug to launch next week

By Paul A. Harris

St. Louis, March 31 - The bank loan market passed a quiet Wednesday, with the Passover and Easter holidays serving to thin the ranks of players.

The LCDX 13 Index was trading at 104 3/8 bid, down 1/8 point, heading into mid-afternoon, according to an East Coast mutual fund manager.

The ServiceMaster Co. term loan strip traded up a point to 96 bid. On Tuesday the Downers Grove, Ill., provider of maintenance services announced it had repaid the last $40 million due on its revolver back in December.

The Tribune Co. term loan B was unchanged at 64 bid.

On the subject of bank debt from bankrupt companies, the new Lyondell Chemical Co. $500 million Libor plus 400 basis points six-year senior secured term loan (Ba2//), which priced Tuesday at 99.00 and later that day broke to par 7/8 bid, eased to par ¾ bid, 101 1/8 offered, on Wednesday afternoon, according to a syndicate banker.

American General plans $2 billion

In the primary market, American General Finance Corp. will hold a Thursday, April 8 bank meeting for its $2 billion five-year senior secured term loan.

Bank of America is the bookrunner.

Pricing remains to be determined.

Proceeds will be used to repay existing debt and fund lending activities.

American General is an Evansville, Ind.-based consumer finance unit of American International Group.

Enticement

An East Coast mutual fund manager declined to speculate where the American General pricing might be set, but said that an introductory context for the credit might be a deal done earlier in the year by another AIG subsidiary, International Lease Finance Corp.

The original $750 million International Lease deal came with a Libor plus 475 bps coupon in February. A $550 million tap priced with a Libor plus 500 bps coupon, in March.

It's not that the American General coupon will necessarily come so high, the buy-sider specified.

However the credit is one leveraged loan investors are unaccustomed to dealing with, and they will demand a certain amount of premium for doing the work.

Also the deal comes with the taint of AIG, the buy-sider remarked.

Harvard Drug sets meeting

Harvard Drug Group, LLC will hold an April 7 bank meeting for a $202 million senior secured credit facility, according to market sources.

Credit Suisse and UBS are leading the deal, which is comprised of a $160 million six-year term loan, a $22 million delayed-draw term loan and a $20 million revolver.

Price talk is Libor plus 450 basis points at 98 with a 2% Libor floor.

Proceeds will be used to help fund the acquisition of the Livonia, Mich.-based independent pharmaceutical distributor by Court Square Capital.

Securus releases talk

Securus Technologies Inc. talked its $210 million credit facility with a Libor plus 600 bps coupon at a reoffer price of 98.

The deal, via Jefferies & Co., comes with a 2% Libor floor.

The facility is comprised of a $40 million revolver and a $170 million term loan.

Proceeds will be used to refinance existing debt, and for general corporate purposes.

Securus is a Dallas-based provider of inmate communications services and offender and case management software design.

A little faith

On Tuesday 24 Hour Fitness Worldwide Inc. talked its $600 million six-year term loan with a coupon of Libor plus 400 bps, at a reoffer price of 98.50, and a 2% Libor floor.

Proceeds will be used to refinance existing debt.

The existing 24 Hour Fitness term loan traded at 96 bid on Wednesday, according to an investor, who added that the loan is up from 94 a couple of days ago, and from 92 approximately a week ago.

That shows that there is some confidence that the fitness company can muscle its loan across the finish line, the investor mused.

And given that there is $575 million of the old deal to refinance, and given that there is an overall scarcity of paper in the market because of the present technical rally, people are apt to have some confidence in 24 Hour Fitness's new deal - at least if most of the holders of the old loan plan to roll into the new one, the source reasoned.

However faith is far from universal, the investor asserted.

"If it was, the existing loan would be trading at 99, not 96," the source added.

And "health and fitness" does not get the entire buy-side out of their warm-up suits, the investor added, noting that the sector is stigmatized by the repeat bankruptcy filings of Bally Total Fitness.

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