ConvaTec bid rises; U.S. Coal pulls term loan; Web.com reveals additional facility details

By Sara Rosenberg

New York, Aug. 23 - ConvaTec Healthcare's term loan was bid higher during Tuesday's trading session, which was otherwise described by sources as having a negative bias with levels, in general, off by about a point.

Over in the primary, U.S. Coal Corp. opted to remove its term loan from the primary due to market conditions, and Web.com released some more details on its proposed acquisition financing credit facility, including the expected Libor floor and call premiums.

ConvaTec levels tighten

ConvaTec's term loan was quoted at 92½ bid, 94 offered on Tuesday versus levels of 92 bid, 94 offered, according to a trader. The loan had weakened by about half a point to a point during the previous session on rumors that the company submitted a bid to purchase Kinetic Concepts Inc.

In July, Kinetic Concepts, a San Antonio-based medical technology company, entered into an agreement to be acquired by Apax Partners, Canada Pension Plan Investment Board and the Public Sector Pension Investment Board.

However, talk is that ConvaTec put in a higher bid for Kinetic Concepts before the end of the go-shop period, which was at 11:59 p.m. ET on Sunday - although no official word has emerged yet.

It is also rumored that ConvaTec, a Skillman, N.J.-based medical technologies company owned by Nordic Capital and Avista Capital Partners, would get new debt financing for the purchase that would be led by Goldman Sachs & Co. and Jefferies & Co.

Kinetic/Apax buyout details

The Apax agreement that was reached in July calls for the purchase of the Kinetic Concepts for $68.50 per share in cash in a transaction valued at $6.3 billion, including outstanding debt. Closing is expected in the second half of this year, subject to certain conditions, including shareholder and regulatory approvals.

With this buyout, Kinetic Concepts has received debt commitments for a $2.8 billion senior secured credit facility (Ba3/BB-) - comprised of a $2.6 billion term loan and a $200 million revolver - and $2.15 billion of bonds (backed by bridge loans). There would also be $1.75 billion of equity.

The credit facility already launched to senior managing agents earlier this month, and the retail launch is anticipated as post-Labor Day business, assuming the buyout takes place.

Bank of America Merrill Lynch, Morgan Stanley & Co. Inc. and Credit Suisse Securities (USA) LLC are the lead banks on the deal.

U.S. Coal withdraws deal

In more loan happenings, U.S. Coal's $105 million six-year term loan (B2/B+) was pulled from the primary as a result of unfavorable conditions, according to a market source.

Originally, the deal was being marketed to institutional investors, but in early August, amortization on the term loan was revised to 10% per annum from 1% in an attempt to get banks interested.

Price talk on the loan was Libor plus 600 basis points with a 1.5% Libor floor and an original issue discount of 99, and there was call protection of 103 in year one, 102 in year two and 101 in year three. No changes were made to these terms during the attempted syndication process.

Credit Suisse Securities (USA) LLC was leading the deal that would have been used to refinance existing debt.

U.S. Coal is a Lexington, Ky.-based producer of coal in Central Appalachia.

Web.com floor expectations

Web.com disclosed that its proposed $600 million seven-year first-lien term loan B and $150 million eight-year second-lien term loan are anticipated to have a 1.25% Libor floor, according to a PREM14A filed with the Securities and Exchange Commission on Tuesday.

Also, the second-lien term loan is expected to include call protection of 102 in year one and 101 in year two, the filing said.

As was previously reported, the company expects the first-lien term loan to be priced at Libor plus 425 bps and the second-lien term loan to be priced at Libor plus 800 bps.

The company's $800 million senior secured credit facility also includes a $50 million five-year revolver with anticipated pricing of Libor plus 425 bps. This tranche is expected to be undrawn at close.

Web post-Labor Day business

Web.com, a Jacksonville, Fla.-based provider of internet services and online marketing services, is anticipated to launch its credit facility with a bank meeting somewhere in the September/October timeframe, a market source remarked.

J.P. Morgan Securities LLC, Deutsche Bank Securities Inc., Goldman Sachs & Co. and SunTrust Robinson Humphrey Inc. are the joint lead arrangers and bookrunners on the deal.

Leverage is 4.0 times through the first-lien and 5.0 times through the second-lien.

Web buying Network Solutions

Proceeds from Web.com's credit facility will be used to help fund the acquisition of Network Solutions from General Atlantic LLC for $405 million in cash and 18 million shares of common stock and to refinance existing debt at both companies.

At the close, General Atlantic and other current Network Solutions shareholders are expected to own about 37% of Web.com.

Completion of the acquisition is expected in the fourth quarter, subject to Web.com shareholder approval and customary regulatory approvals and conditions, and.

Network Solutions is a Herndon, Va.-based provider of website services, online marketing and domain name registration.

Ashland wraps acquisition

In other news, Ashland Inc. completed its acquisition of International Specialty Products Inc. for $3.2 billion in cash, according to a news release.

To help fund the transaction, Ashland got a new $3.9 billion credit facility (BB), consisting of a $1 billion five-year revolver and a $1.5 billion five-year term loan A, both priced at Libor plus 225 bps, and a $1.4 billion seven-year term loan B priced at Libor plus 275 bps with a 1% Libor floor. The B loan was sold at an original issue discount of 99¾ and has 101 soft call protection for one year.

During syndication, the term B was downsized from $1.7 billion, pricing was revised from Libor plus 300 bps with a discount of 991/2, a 25 bps leverage-based step-down was eliminated, and call protection was added. Also, the revolver was upsized from $750 million and the A loan was upsized from $1.2 billion.

Ashland lead banks

Citigroup Global Markets Inc., Scotia Capital (USA) Inc., Bank of America Merrill Lynch and U.S. Bank acted as the joint lead arrangers and bookrunners on Ashland's credit facility.

Pro forma for the transaction, secured debt to adjusted EBITDA is 3.2 times and total debt to adjusted EBITDA is 3.5 times.

Ashland is a Covington, Ky.-based provider of specialty chemical products and services. International Specialty Products is a Wayne, N.J.-based specialty chemical manufacturer of functional ingredients and technologies.

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