Quad/Graphics, Roundy's break; PVH, DS Waters set talk; Multi Packaging, Sheridan tweak deals

By Sara Rosenberg

New York, April 14 - Quad/Graphics Inc. and Roundy's Supermarkets Inc. saw their new deals free up for trading during Wednesday's session, and both companies' term loans were quoted above their original issue discount prices.

Also in trading, Charter Communications Inc.'s old term loan gained a little bit of ground as the company released some preliminary quarterly results that showed an expected increase in revenues.

Over in the primary market, Phillips-Van Heusen Corp. (PVH) came out with price talk on its proposed credit facility in conjunction with the deal's U.S. launch, and chatter is that there has already been positive feedback from investors, and DS Waters of America Inc. also released pricing guidance on its new loan.

Furthermore, on the new deal front, Multi Packaging Solutions Inc. came out with changes to its term loan, including reducing the size and lifting the spread as well as the Libor floor, and Sheridan Production Partners downsized its term loan.

Quad/Graphics frees to trade

Quad/Graphics' credit facility hit the secondary market on Wednesday, with the $700 million six-year term loan B quoted at par bid, par ½ offered, according to a trader.

Pricing on the term loan B is Libor plus 400 basis points with a 1.5% Libor floor, and it was sold at an original issue discount of 981/2. There is 101 soft call protection for one year.

During syndication, the term loan was downsized from $800 million, pricing was increased from Libor plus 350 bps and the original issue discount widened from 99.

The company's $1.23 billion credit facility (Ba2/BB+) also includes a $530 million four-year revolver that was upsized from $400 million during syndication.

Financial covenants under the facility include a maximum leverage ratio, a minimum interest coverage ratio and a consolidated net worth requirement.

Quad/Graphics buying World Color

Proceeds from Quad/Graphics' credit facility will be used to help fund cash distributions in connection with the acquisition of World Color Press Inc., refinance its existing revolver, refinance World Color's existing debt, and fund the repayment of certain other World Color obligations.

JPMorgan and U.S. Bank are the lead banks on the facility, with JPMorgan committing $1.05 billion of the deal and U.S. Bank committing $150 million.

Quad/Graphics is a Sussex, Wis.-based printer of catalogs, magazines and other commercial products. World Color is a Montreal-based provider of print, digital and related services to retailers, catalogers, publishers, branded-goods companies and other businesses.

Roundy's breaks

Also freeing up for trading was Roundy's Supermarkets' $150 million second-lien term loan (Caa1/CCC+), with levels initially seen at par bid, 101 offered and then the bid moved up to par 1/2, according to a trader,

Pricing on the term loan is Libor plus 800 bps with a 2% Libor floor, and it was sold at an original issue discount of 98. Call protection on the loan is 102 in year one and 101 in year two.

During syndication, pricing on the loan was reduced from Libor plus 850 bps and the call protection was changed from 103 in year one, 102 in year two and 101 in year three.

Credit Suisse is the lead bank on the deal that will be used to fund a dividend payment.

Roundy's is a Milwaukee-based operator of retail grocery stores.

Charter strengthens

Charter Communications' old term loan was a little better after the company announced preliminary results for revenues and operating costs and expenses for the quarter ended March 31, according to traders.

The old term loan was quoted by one trader at 96¼ bid, 96½ offered, up from 96 1/8 bid, 96 3/8 offered, and by a second trader at 96¼ bid, 96 5/8 offered, up from 96 bid, 96 3/8 offered.

However, the second trader said that the company's new term loan and extended term loan were both unchanged on the day, with the new loan quoted at 102¼ bid, 102¾ offered and the extended loan quoted at 97 7/8 bid, 98 1/8 offered.

For the quarter, the company expects revenues to be $1.735 billion, an increase of 4.5% compared with the pro forma results of the first quarter of 2009.

And, operating costs and expenses, which include operating and selling, general and administrative expenses, are expected to be $1.098 billion, an increase of 5.1% compared to the pro forma results of the previous year.

Charter capex increasing

Charter also said on Wednesday that it expects capital expenditures for the first quarter to be about $310 million, compared with $269 million in the first quarter of 2009. The company continues to anticipate that capital expenditures for the full year will be approximately $1.2 billion.

As for liquidity, the company has about $1 billion, including cash and access to capital under its $1.3 billion revolver, which had availability of around $760 million as of March 31.

Total principal amount of debt at the end of the quarter was about $12.8 billion.

Charter is a St. Louis-based broadband communications company and cable operator.

Phillips-Van Heusen price talk

Switching to the primary, Phillips-Van Heusen held a bank meeting in New York on Wednesday to kick off the retail syndication of its proposed $2.45 billion senior secured credit facility (Ba2/BBB), and in connection with the launch, price talk was announced, according to a market source.

The $450 million five-year revolver and the $500 million five-year term loan A were presented with talk of Libor plus 300 bps on the U.S. debt and Euribor plus 325 bps on the foreign debt, the source said.

And, the $1.5 billion six-year term loan B is being talked at Libor plus 325 bps to 350 bps on the U.S. piece, and the euro piece will price 25 bps wider than the U.S. loan, so it is being talked at Euribor plus 350 bps to 375 bps, the source continued.

The revolver is a multi-currency deal, the term loan A is expected to be 50% U.S. dollars and 50% euro, and the term loan B is targeted to be two-thirds U.S. dollar and one-third euro.

Phillips-Van Heusen OID, fees

Phillips-Van Heusen's entire term loan B is being offered at an original issue discount of 99, and upfront fees on the revolver and the term loan A are 100 bps on allocation for a $40 million commitment and 50 bps on allocation for a $20 million commitment, the source continued.

Both the term loan A and the term loan B include a 1.75% Libor floor, while the revolver has no floor.

Barclays Capital and Deutsche Bank are the global debt coordinators and bookrunners on the deal, with Barclays the left lead. Other bookrunners include Bank of America, Credit Suisse and RBC Capital Markets.

The deal will be launched to European retail investors through a bank meeting that is set to take place on Friday.

Phillips-Van Heusen attracts attention

Phillips-Van Heusen began a senior managing agent round for its revolver and term loan A in March, and that process, which just wrapped up, resulted in 10 banks signing on to agent roles, the source remarked.

And, the term loan B has already seen a lot of reverse inquiry/orders from lenders even though Wednesday was the first time the tranche was officially launched, the source added.

Commitments are due on April 28.

Proceeds from the credit facility will be used to help fund the acquisition of Tommy Hilfiger BV from Apax Partners LP for €2.2 billion, or about $3 billion, plus the assumption of €100 million in liabilities, and to refinance Phillips-Van Heusen's $300 million of existing senior unsecured notes due in 2011 and 2013.

The consideration to be paid to Apax includes €1.924 billion in cash and €276 million in Phillips-Van Heusen common stock.

Phillips-Van Heusen selling notes

Phillips-Van Heusen also plans on issuing $600 million of senior unsecured notes, $200 million of Phillips-Van Heusen perpetual convertible preferred stock, and roughly $200 million in common stock to fund the acquisition as well.

In addition, the company will use $385 million of cash on hand for acquisition financing.

At close, the pro forma debt to EBITDA ratio is anticipated to be 3.6 times, but the company expects to generate a minimum of $300 million annually in free cash flow to pay down debt so that by the end of fiscal 2012, the pro forma debt to EBITDA ratio could drop to 2.0 times.

Closing of the transaction is anticipated for the company's second fiscal quarter, subject to receipt of financing and other customary conditions, including receipt of required regulatory approvals.

On April 2, the U.S. Department of Justice and Federal Trade Commission granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act for the acquisition. Certain required foreign regulatory approvals are still needed.

New York-based Phillips-Van Heusen and Tommy Hilfiger are apparel companies.

DS Waters guidance

DS Waters of America was another deal that launched with a bank meeting on Wednesday, and at that time, news surfaced that the company's $275 million term loan is being talked at Libor plus 350 bps with a 1.5% Libor floor and an original issue discount of 99, according to sources.

JPMorgan is the lead bank on the $375 million credit facility (Ba2), which also includes a $100 million revolver.

Proceeds will be used to refinance existing debt.

DS Waters is an Atlanta-based home and office water delivery company.

Multi Packaging revises term loan

Multi Packaging Solutions, a New York-based entertainment packaging company, made some changes to the size and pricing on its six-year term loan, according to market sources.

Under the modifications, the term loan was downsized to $182.5 million from $215 million, the spread was raised to Libor plus 450 bps from Libor plus 425 bps, and the Libor floor was increased to 2% from 1.75%, sources said.

Furthermore, a step-down in pricing was added to the term loan under which the spread can drop to Libor plus 425 bps based on leverage.

The original issue discount on the term loan was left unchanged at 99.

The company's now $212.5 million, down from $245 million, credit facility (B2/B) also includes a $30 million five-year revolver that was left unchanged at Libor plus 400 bps with an upfront fee of 99.

Wells Fargo, UBS and Barclays are the joint lead arrangers on the deal that will be used for a dividend recapitalization.

Sheridan Production trims size

Sheridan Production Partners lowered the size of its seven-year term loan to $600 million from $700 million, while leaving pricing at Libor plus 550 bps with a 2% Libor floor and an original issue discount of the 981/2, according to a market source.

Pricing on the term loan had been flexed up last week from Libor plus 450 bps, and it's because of this flex that the downsizing was done, the source explained.

The term loan does include a step-down to Libor plus 450 bps if the company achieves public corporate ratings of B2/B or better. This step was added when pricing was increased.

UBS and JPMorgan are the lead banks on the deal that will be used to refinance an existing revolver. As a result of the downsizing, the revolver will stay at up to $400 million rather than getting paid down to $300 million.

Allocations on the Houston-based oil and gas production company's term loan are targeted to go out on Thursday, the source added.

CF wraps bank process

CF Industries Holdings Inc. finished the commercial bank syndication process for its proposed $300 million five-year revolving credit facility on Wednesday, according to a market source.

As was previously reported, the revolver is priced at Libor plus 350 bps with a 1.5% Libor floor, stepping down to Libor plus 300 bps upon the issuance of at least $750 million of equity to repay debt. The revolver pricing will also be based on a leverage grid.

The company's $2.3 billion credit facility (Ba1/BBB/BBB-) also includes a $2 billion five-year term loan B that was so oversubscribed that the books were shut down ahead of schedule.

Pricing on the term loan B is initially Libor plus 350 bps with a 1.5% Libor floor. Pricing will drop to Libor plus 300 bps upon the equity issuance, and there is a step-down to Libor plus 275 bps when leverage is below 2.0 times. The leverage-based step-down was just added last week.

The term loan B is being offered at an original issue discount of 991/2, while the revolver is being offered with upfront fees.

CF lead banks

Morgan Stanley and the Bank of Tokyo-Mitsubishi UFJ are the lead banks on CF Industries' credit facility, with Morgan Stanley the administrative agent.

The company completed the first drawdown under its credit facility on April 5 to finance the purchase of roughly 86% of Terra Industries Inc.'s shares that were tendered under an acquisition agreement.

A subsequent offering period for all remaining shares of Terra common stock was started and was scheduled to expire on April 9, at which time about 87.5% of the outstanding shares of Terra common stock had been validly tendered. The tender was then extended to April 14.

Following completion of the exchange offer, the company plans to do an about $1 billion common stock offering and a $1.6 billion senior notes offering, with proceeds being used to reduce borrowings under its $1.75 billion bridge loan and the term loan B.

CF Industries is a Deerfield, Ill.-based producer and distributor of nitrogen and phosphate fertilizer products. Terra is a Sioux City, Iowa-based producer and marketer of nitrogen and methanol products.

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