MTS Systems breaks; NAPA Management sets issue price; On Assignment tables repricing

By Sara Rosenberg

New York, June 28 – MTS Systems Corp.’s credit facility made its way into the secondary market during Tuesday’s session, with levels on the term loan B quoted above its original issue discount.

Meanwhile, in the primary market, NAPA Management Services Corp. (NMSC Holdings Inc.) set the original issue discount on its add-on term loan at the tight end of guidance, and On Assignment Inc. removed its term loan B repricing proposal from market.

Additionally, Douglas Dynamics Inc. saw price talk surface on its incremental term loan, and Adient Ltd. launched its pro rata credit facility.

MTS hits secondary

MTS Systems’ credit facility began trading on Tuesday, with the $460 million seven-year covenant-light term loan B quoted at 99½ bid, par offered, according to a market source.

Pricing on the term loan B is Libor plus 425 basis points with a 0.75% Libor floor, and it was sold at an original issue discount of 99. The debt has 101 soft call protection for one year.

Recently, pricing on the B loan firmed at the high end of the Libor plus 400 bps to 425 bps talk, the call protection was extended from six months, and the incremental allowance was changed to $75 million plus amounts up to 3.25 times senior secured leverage from $125 million plus amounts up to 3.75 times senior secured leverage.

The company’s $560 million credit facility (B1/BB-) also includes a $100 million five-year revolver.

MTS buying PCB

Proceeds from MTS’ credit facility will be used with a common stock offering and a tangible equity units offering to fund the $580 million acquisition of PCB Group Inc. and to repay existing revolver borrowings.

J.P. Morgan Securities LLC and Wells Fargo Securities LLC are leading the loan deal.

Closing on the acquisition is expected in MTS’ fiscal fourth quarter that ends Oct. 1, subject to regulatory approvals and other customary conditions.

MTS is an Eden Prairie, Minn.-based supplier of high-performance test systems and position sensors. PCB is a Depew, N.Y.-based designer, manufacturer and distributor of sensor technologies.

NAPA firms OID

Switching to the primary market, NAPA Management Services finalized the original issue discount on its $13 million add-on covenant-light term loan B due April 19, 2023 at 99.5, the tight end of the 99 to 99.5 talk, according to a market source.

The add-on term loan is priced at Libor plus 500 bps with a 1% Libor floor, in line with the existing term loan, and the debt has 101 soft call protection through April 2017.

Deutsche Bank Securities Inc. is leading the deal that will be used with a roughly $9 million second-lien term loan and $4 million in new equity from ownership to fund the tuck-in acquisition of Northern New Jersey Anesthesia Associates.

NAPA is a Melville, N.Y.-based independent, outsourced anesthesia and perioperative management services company.

On Assignment postponed

On Assignment removed from market the request to reprice its roughly $700 million term loan B to Libor plus 275 bps with a 0.75% Libor floor from Libor plus 300 bps with a 0.75% Libor floor, a market source remarked.

The proposed repriced term loan B was being offered at par and included 101 soft call protection for six months.

Wells Fargo Securities LLC was leading the deal.

On Assignment is a Calabasas, Calif.-based provider of diversified professional staffing solutions.

Douglas talk emerges

Douglas Dynamics launched its fungible $130 million incremental term loan (B2) with talk of Libor plus 425 bps with a 1% Libor floor, in line with existing term loan pricing, and an original issue discount of 99, according to a market source.

The incremental and existing term loan debt will get 101 soft call protection for six months, the source said.

Commitments are due on July 8.

J.P. Morgan Securities LLC and Wells Fargo Securities LLC are leading the deal that will be used with an ABL revolver draw and cash on hand to fund the $206 million acquisition of Dejana Truck and Utility Equipment.

Closing is expected in the third quarter, subject to customary regulatory approvals and other conditions.

Douglas Dynamics is a Milwaukee-based manufacturer of vehicle attachments and equipment. Dejana is a Kings Park, N.Y.-based truck equipment company.

Adient launches

Adient held its bank meeting on Tuesday, launching its $1.5 billion revolver and a $1.5 billion five-year term loan with initial pricing of Libor plus 175 basis points, a market source said.

J.P. Morgan Securities LLC is the $3 billion credit facility that is being done in connection with the company’s spin-off from Johnson Controls Inc.

Proceeds will be used with $2 billion of bonds to fund a $3 billion distribution to Johnson Controls, with the remaining $500 million in cash to be held by Adient.

Closing is expected in the third quarter.

Adient is a London-based automotive seating and interiors company.

Dynegy closes

In other news, Dynegy Inc. funded into escrow its $2 billion seven-year senior secured incremental first-lien covenant-light term loan (Ba3/BB), according to an 8-K filed with the Securities and Exchange Commission.

Pricing on the term loan is Libor plus 400 bps with a 1% Libor floor, and it was sold at an original issue discount of 99. The debt has 101 soft call protection for six months.

During syndication, the spread on the loan was lifted from talk of Libor plus 350 bps to 375 bps.

Morgan Stanley Senior Funding Inc., Deutsche Bank Securities Inc., Goldman Sachs Bank USA, RBC Capital Markets, MUFG, BNP Paribas Securities Corp., Credit Agricole and SunTrust Robinson Humphrey Inc. led the deal that is being used to help fund the acquisition of Engie’s U.S. fossil fuel portfolio.

The Houston-based energy company will also use proceeds from a tangible equity units offering, Energy Capital Partners’ purchase of $150 million of the company’s common stock and cash-on-hand for the acquisition.

Closing on the acquisition is expected in the fourth quarter.

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