Trading volume was light on the break of Endurance Business Media and Herbalife International's term loans in the secondary last week. Endurance's $120 million term loan "B" broke at 100 1/4-100 1/2, while Herbalife's $200 million term loan broke at 100 1/8-100 3/8.
Credit Suisse and Wachovia Securities lead the Endurance term loan, which is priced at LIBOR plus 2 3/4%. It replaces a $100 million term loan "B," also priced at LIBOR plus 2 3/4%. One dealer said trading was thin because of the small size of the loan and the unpopularity of the publishing sector with many investors. "The publishing space is typically not the most liquid. A lot won't do it because it is cash-flow driven. There is a smaller universe of demand," he said. The facility also consists of a $60 million second-lien term loan, which a dealer said did not trade. The company will use the second lien and the $20 million of additional first-lien term loan borrowings to provide a $77 million sponsor dividend payment and pay transaction expenses, according to a Moody's Investors Service release. Endurance officials did not return calls.
Merrill Lynch and Morgan Stanley lead Herbalife's term loan, which is priced at LIBOR plus 1 1/2%. A dealer said trading was inactive on its break because most of the existing lenders bought into the new loan so there was a lack of sellers. Frank Lamberti, v.p. of finance at Hebalife, said a lot of its existing lenders are pleased with the company's progress and held on to their investments.
The facility will be used to repay or redeem most of Herbalife's existing debt, including a $225 million facility and $165 million of 9 1/2% notes due 2011 (CIN, 7/06). The company will have no bond debt after it pays off the notes, said Lamberti. "We want to put the debt in a pre-payable form. It gives us more flexibility. It is less complicated than having bond debt," he said. Los Angeles-based Herbalife produces weight management products.