Burger King, Reynolds Group fix meetings; LCDX plows higher; Aspen Dental sets talk

By Paul A. Harris

St. Louis, Sept. 10 - The LCDX 14 bank loan index gained another 1/8 point on Friday, closing the week at 96½ bid, according to a debt capital markets banker.

However, the action is in the primary market, according to a bank loan trader, who added that the active calendar now contains 16 deals.

"Everybody is being told to get their orders in, sooner than later, because these deals are getting oversubscribed, and timing will possibly be moved up," the source added.

NBTY Inc.'s $1.3 billion term loan B, which launched earlier in the week via Barclays, Bank of America Merrill Lynch and Credit Suisse, is one such deal.

It is already oversubscribed, the trader said.

Valeant Pharmaceuticals International Inc.'s $1.875 billion credit facility, which also launched during the past week, via Goldman Sachs, Morgan Stanley and Jefferies, is doing extremely well, the source added.

Another of the past week's deals, Tomkins plc's $1 billion six-year term loan via Citigroup and Bank of America Merrill Lynch, is already 80% subscribed, the source added.

"And everybody knows that the people who are already in these names have an advantage," the trader maintained.

Medical Card Systems prices

In Friday's primary market action, Puerto Rico managed care provider Medical Card Systems priced a $175 million five-year term loan with a 1,000 bps over Libor spread and a 2% Libor floor. The original issue discount is 97.

The spread came at the cheap end of the Libor plus 900 bps to 1,000 bps spread talk. The discount came cheap to price talk of 98.

The deal features a soft call at 102 in year one, declining to 101 in year two.

Jefferies & Co. and Deutsche Bank managed the syndication.

Proceeds will be used to fund a dividend to the company's owners and for general corporate purposes.

Aspen Dental releases talk

Meanwhile, Aspen Dental set price talk for its $150 million six-year first-out term loan.

The spread talk is Libor plus 500 bps to 525 bps, with a 1.75% Libor floor. Discount talk is 98.

The $230 million deal also features a $35 million five-year revolver and a $45 million six-year last-out term loan.

UBS and Jefferies & Co. are the managers.

Proceeds will be used to help fund the buyout of the company by Leonard Green & Partners LP.

Burger King for Tuesday

Also in the week ahead, Burger King Holdings Inc. plans to launch its $1.9 billion credit facility at a Tuesday bank meeting.

JP Morgan and Barclays Capital are the lead banks on the financing, which includes a $1.75 billion institutional term loan and a $150 million revolver.

Proceeds, in conjunction with an expected $900 million issue of high-yield bonds, will be used to help fund the LBO of Burger King by 3G Capital, and to refinance existing debt.

Reynolds meeting Monday

Reynolds Group Holdings Ltd. will hold a bank meeting on Monday for its $1.5 billion credit facility.

Credit Suisse, HSBC and Australia and New Zealand Banking Group are the lead banks on the financing.

The facility features a $1 billion term loan B that is structured as an amendment to the company's existing term loan B.

Interest on the new term loan B is set at Libor plus 500 basis points, with a 2% Libor floor. Interest on the existing term loan B will be increased to Libor plus 500 bps from Libor plus 425 bps.

In addition, Reynolds Group launched a new $500 million term loan A at Libor plus 450 bps, also with a 2% Libor floor.

Proceeds will be used to help fund the acquisition of Pactiv Corp.

The financing also includes $3.5 billion of new bonds, $2 billion of which will be secured.

CHG sets Tuesday meeting

CHG Healthcare Services will hold a bank meeting on Tuesday for a $355 million credit facility.

The deal is structured with a $70 million revolver, a $225 million first-lien term loan and a $60 million second-lien term loan.

The Salt Lake City-based healthcare staffing provider will use the proceeds to repay debt and fund a dividend.

Technical updraft

Decidedly favorable technicals are driving the calendar, the bank loan trader said on Friday.

First of all, there is cash, with nine straight weeks of inflows to the bank loan mutual funds capped by the most recent week's $108 million inflow, as reported Thursday by Lipper-AMG.

On top of that, the bank loan market is attracting shoppers from among high-yield bond investors, the source added.

"A lot of these deals are coming in conjunction with bonds, so the bond guys, who are already working on the credit, put in for the loans, as well," the trader said.

Also adding to the market's technical strength is the fact that at the same time investors are keen to get into new loan paper, they are being taken out of existing paper.

One case that comes to mind is the all-pro rata deal from Oshkosh Corp.:, a $1.2 billion financing in the form of a $550 million revolver and a $650 million term loan A (Ba3/BB-), the source remarked.

"Mutual funds can't buy it, and a lot of accounts own the existing loan which is being taken out," the trader said.

"That's a lot of paper that's just gone."

In March of 2009 the old Oshkosh loan was trading in the high 60s and low 70s, the trader related.

"Then they got an amendment done, and were paying Libor plus 600 bps.

"Now they just refinanced at Libor plus 300 bps, with no Libor floor.

"It's unbelievable how quickly the cost of capital came down for that credit."

Secondary remains well bid

Nor has the impressive calendar created slippage in the secondary market, the trader related.

"Demand is intense," the source said.

"We're seeing callable bank loans being bid above par, which we have not seen that since 2006 and 2007," the source added

Meanwhile, lower-tier credits such as First Data Corp. and TXU are also bid up a couple of points: First Data's term loan was at 87 bid, 88 offered, on Friday, versus 85 bid a couple of weeks ago, the trader said.

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