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LevFin Insights BDC Portfolio News 1-21-20

Posted on January 22, 2020

Heavy slate of repricings looks to trim yields in several BDC-held positions, including AlixPartners, Red Ventures and Sirius Computer Solutions

Loan market conditions swung wildly in issuers’ favor last week as accounts fell over themselves to put money to work. Heavy oversubscription was the order of the day, leaving investors open to tightening yields and loose documentation. High-yield deals also generated strong demand with more than $8 billion of prints amid a string of drive-by deals.

Loan arrangers rolled out a $38 billion calendar loans across 32 issuers last week, but that headline number belies the real issue here: There’s just $3.2 billion of net new money in that tally, and M&A business, which often includes some portion of rollover paper, accounted for only $4.7 billion of gross volume across seven transactions.

The massive oversubscriptions on LBO deals along with the deluge of repricing activity — LFI has tallied up 28 spread-cutting exercises in the year-to-date totaling a whopping $44.3 billion, making January already the busiest month for repricings since May 2018 even with another two weeks to go — have quickly repriced the single-B market. So quick, in fact, that three issuers — First Eagle, Presidio and Sophos — cut pricing twice and issuers such as LifePoint Health and Victory Capital flexed down their repricings.

Portfolios in brief: Holds reflect most recent reporting period available

BBDC: AlixPartners (B2/B+) — repricing

A Deutsche Bank-led arranger group launched a repricing of AlixPartners’ $1.513 billion U.S. dollar term loan. The issuer is seeking to take pricing on the term loan due April 2024 to L+250, from L+275. The repriced loan is offered at par and would include six months of 101 soft call protection. Commitments are due Thursday, Jan. 23. Barings BDC holds $8M in principal amount of the company’s existing 1L debt.

CION, HMS, OCSL, OCSI, MAIN: Allen Media (B2/B) — M&A

RBC Capital Markets launched its M&A loan package for Allen Media Group, setting a lender meeting on Thursday, Jan. 23. AMG in October inked a deal to buy 11 broadcast television stations from USA Television Holdings and USA Television MidAmerica Holdings for $290 million. Allen Media will finance that acquisition and refinance its own debt via a $25 million five-year revolver, a $530 million seven-year term loan B and $300 million of eight-year senior notes. Allen Media in 2018 lined up a $375 million term loan due 2023 (L+650) to back acquisitions, fund a $30 million dividend and refinance debt. The loan is covered by 101 hard call protection through August. The existing loan is governed by a total leverage test. Holders of the company’s existing 1L debt include CION Investment Corp. with $74M in principal amount, HMS Income Fund with $16.5M, Oaktree Specialty Lending Corp. with $19.2M, Oaktree Strategic Income Corp. with $4.8M and Main Street Capital Corp. with $16.5M. CION and Main Street each hold $24.8M and $15M, respectively in 1L debt due July 2024 (L+625) at related entity Allen Media Broadcasting.

BBDC: American Airlines Group (Ba3/BB-) — repricing, amen & extend, incremental

American Airlines is seeking to amend, extend and upsize to $1.215 billion its term loan due 2021, while repricing the deal to L+175 with a 0% floor. The seven-year term loan is offered at 99-99.5 and would include six months of 101 soft call protection. The $1.202 billion term loan due October 2021 is currently priced at L+200 with a 0% floor. Arranger and administrative agent Citi has set a deadline of noon ET on Wednesday, Jan. 22, for existing lenders, with new lender commitments due a day later. On Sept. 30, American Airlines also had tranches of $970 million and $1.225 billion due in 2023 (L+200), and $1.807 billion due 2025 (L+175). Barings BDC holds $7.9M of the tranche due 2025.

Ares, OHAI: Caliber Collision (B2/B) — repricing, incremental

An arranger group led by BofA Securities launched a repricing and $100 million increase to Caliber Collision’s first-lien term loan, setting talk of L+300 with 0% floor at par on the upsized $1.945 billion term loan. Proceeds of the increase will be used to repay revolver outstandings. The loan due February 2026 is currently priced at L+350. There’s no lender call but a replay and transcript of the issuer’s December call is available. Commitments are due on Thursday, Jan. 23. Holders of the company’s 2L debt due February 2025 (L+725) include Ares Capital with $180.2M in principal amount and OHA Investment Corp. with $1.1M.

Monroe: Gigamon (B3/B) — add-on, repayment

Jefferies launched a $150 million fungible add-on to Gigamon’s first-lien term loan due December 2024 (L+425). The lender call is set for 2 p.m. ET Wednesday, Jan. 22. Proceeds will be used to repay the issuer’s $150 million second-lien term loan due 2025 (L+850). Gigamon will reset the loan’s 101 soft call protection for six months. Proceeds of the first- and second-lien deal backed Evergreen Coast Capital’s $1.6 billion acquisition of the network software firm. Monroe Capital Income Plus Corp. holds $1.5M in principal amount of the existing 1L debt.

Audax: Grocery Outlet (B2/B+) — repricing

An arranger group led by Morgan Stanley outlined talk of L+300 with a 0% floor at par on the proposed repricing of Grocery Outlet’s roughly $460.2 million term loan. The loan was repriced last July to L+350, from L+375, and included a 25 bps ratings-based step-down tied to a Moody’s upgrade to B1 that will remain in place following the current repricing. The repriced loan due October 2025 will include six months of 101 soft call protection. Commitments and consents are due Wednesday, Jan. 22. In addition to administrative agent and left lead Morgan Stanley, the arranger line-up includes BofA Securities, Deutsche Bank and Jefferies. Audax Credit BDC holds $1.3M in principal amount of the existing 1L debt.

GSBD: HALO Branded Solutions (B2/B) — add-on, GCP

Antares Capital has approached the market with a 98.8 OID for a $30 million incremental term loan to support the continuing acquisition strategy of HALO Branded Solutions. HALO was last in the market in July 2018 with a $270 million first-lien term loan due 2025 (L+450) that was issued at 99 and a $100 million second-lien term loan due 2026 (L+825) that was issued at 98.5. Antares was left lead on the financing, which priced wide of talk with a shift of funds and revisions to documentation. Proceeds backed the purchase of HALO by TPG Growth and company management. HALO is a Sterling, Ill.-based marketing services platform that distributes promotional products and provides employee recognition services. Goldman Sachs BDC holds $8.5M in principal amount of the existing 1L debt.

BDVC: Iridium Communications (B1/B) — add-on, refinancing

Accounts received allocations of the $200 million add-on term loan for Iridium Communications (L+375), which broke to a 101.5–101.75 market, from issuance at 101. Deutsche Bank was left lead on the deal, which cleared tight to original talk, and is the first par-plus print in the loan market since October 2018. Proceeds, along with cash on hand, will be used to refinance the issuer’s 10.25% notes due 2023, shifting the company to an all-senior capital structure. Business Development Corp. of America $3.5M of 10.25% subordinated notes due April 2023.

FSK: Nouryon (B2/B+/B+) — repricing

J.P. Morgan launched a cross-border repricing for Nouryon, the former AkzoNobel Speciality Chemicals. The issue is seeking to reduce pricing on its $4.197 billon term loan to L+300, from L+325, while the €1.79 billion term loan would be repriced to a range of E+325-350, from E+375. Both loans due Oct. 1, 2025 include a 0% floor and a 25 bps step-down when leverage is less than 4.25x. The repriced loan are offered at par and would include six months of 101 soft call protection. Commitments are due on Thursday, Jan. 23. Holders of the company’s 8% subordinated notes due October 2026 include FS KKR Capital Corp. with $1.5M in principal amount, FS Investment Corp. II with $6.3M, FS Investment Corp. III with $7.3M and FS Investment Corp. IV with $1.8M.

CION: Pixelle Specialty Solutions (B2/B) — add-on, M&A

Credit Suisse and Citizens Bank set price talk of L+625-650 with a 1% floor and a 98 OID on the $255 million incremental first-lien term loan for Pixelle Specialty Solutions. The issuer is offering lenders six months of 101 soft call protection. Proceeds would support the company’s acquisition of two paper mills from Verso Corp. The add-on loan would be fungible with the existing term loan due October 2024, which is currently priced at L+600 but would be repriced upwards to match the spread on the incremental debt. The loan is governed by a net total leverage covenant. Commitments are due by 5 p.m. ET Thursday, Jan. 30. CION Investment Corp. holds $24.8M in principal amount of the company’s existing 1L debt.

BBDC: Red Ventures (B1/BB-/B+) — repricing

BofA Securities set talk of L+250-275 with a 0% floor and a 99.875-100 offer price on the proposed repricing of Red Ventures‘ $2.284 billion term loan. The repriced term loan would also include six months of 101 soft call protection. Commitments are due at noon ET Wednesday, Jan. 22. The issuer’s existing covenant-lite term loan due November 2024 is currently priced at L+300 and is callable at par. Barings BDC holds $7.6M in principal amount of the company’s existing 1L debt.

FLEX: Sirius Computer Solutions (B2/B) — repricing

Credit Suisse began marketing a repricing of Sirius Computer Solutions’ $746 million first-lien term loan, outlining talk of L+325-350 with a par offer price. The existing term loan due July 2026 is priced at L+425. The issuer is offering six months of 101 soft call protection. A lender call is scheduled for 2 p.m. ET today. Commitments are due by 5 p.m. ET Monday, Jan. 27. TP Flexible Income Fund holds $1.2M in principal amount of the company’s existing 1L debt.

FSK: VICI Properties (Ba3/BB/BB) — repricing

Morgan Stanley, Goldman Sachs and other arrangers set talk of L+175 with a 0% floor at par on the proposed repricing of VICI Properties’ $2.1 billion first-lien term loan. Commitments and consents are due today. The repriced loan would include six months of 101 soft call protection. This issuer previously sought to reprice the term loan due December 2024 to L+175, from L+200. The loan was originally priced at L+225, but the margin stepped down following VICI’s January 2018 initial public offering. Goldman Sachs is administrative agent. Corporate Capital Trust II holds an equity stake valued at $1.5M. – Thomas Dunford

Download LFI BDC Portfolio News 1-21-20 for BDC investment details provided by Advantage Data; click through links to view stories by LFI.

thomas.dunford@levfininsights.com 212.205.8552

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