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LevFin Insights BDC Portfolio News 1-27-20

Posted on January 27, 2020

Barrage of repricing activity continues as issuers including BrightSpring Health, Perforce Software and Tank Holding seek to trim yields

Download: LFI BDC Portfolio News 1-27-20

The loan and high-yield markets roared back to life after the long Martin Luther King Jr. Day weekend with a staggering outpouring of opportunistic activity, particularly in loans as repricing activity extended into the B3 band but also in high-yield, which racked up near-record issuance. And, amid issuers pressing their advantage, at least one deal stood out from the crowded pack as Cision rolled out a $300 million dividend deal mere moments after allocating its take-private LBO loan.

Powered by the torrent of repricing activity, launched loan volume registered a towering $70.7 billion from 48 issuers, and while M&A activity was on the upswing with $10.3 billion of volume, the $52.7 billion of opportunistic activity took center stage. Indeed, with so much rearranging of the deck chairs, net launched volume was only $12.3 billion. Still, in terms of gross volume, it was the busiest week since LevFin Insights began tracking volume in the fourth quarter of 2016.

Portfolios in brief: Holds reflect most recent reporting period available

BBDC, PTMN, BDVC, GARS, SUNS: Acrisure (B3/B) — refi

J.P. Morgan set talk of L+350-375 with a 0% floor and a 99.75 offer price on the $2.8 billion, seven-year B term loan for Acrisure. Proceeds, along with those from new secured debt, would be used to refinance existing debt. The issuer will reset 101 soft call protection for six months. Commitments are due by 5 p.m. ET on Thursday, Jan. 30. Acrisure last tapped the loan market in June for a $500 million incremental loan due November 2023 (L+375), proceeds of which were earmarked to fund acquisitions and levered the issuer at 4.3x/6.4x, sources said at the time. The incremental debt was not fungible with the borrower’s then-$1.971 billion term loan due November 2023 (L+425). Holders of the L+425 term loan debt include Barings BDC with $9.9M in principal amount, Portman Ridge Finance Corp. with $2M, Business Development Corp. of America with $20.3M, Garrison Capital with $1.5M and Solar Senior Capital with $7.3M.

Audax: Advisor Group (B2/B/B) — M&A

A UBS-led arranger group set price talk of 99.5 on the $200 million add-on term loan for Advisor Group. The add-on would be fungible with the issuer’s $1.025 billion first-lien term loan due July 2026 (L+500), which is covered by 101 soft call protection that runs through the end of the month. Commitments are due Thursday, Jan. 30. Proceeds help fund the acquisition of independent advisory and brokerage firm Ladenburg Thalmann Financial Services, which was announced in November and expected to close in the first half of the year. Advisor Group today also announced plans via subsidiary AG Issuer to offer $575 million of first-lien notes due 2028 to fund the Ladenburg Thalmann acquisition. Market sources relayed that BofA Securities is lead bookrunnner, and that pricing is expected after the full week of roadshow dates through Friday, Jan. 31. Audax Credit BDC holds $1.5M in principal amount of the company’s existing 1L debt.

Audax, OXSQ, PSEC: AmeriLife Group (B3/B) — LBO

A Credit Suisse-led arranger group set talk of L+425-450 with a 0% floor and a 99.5 offer price on the $465 million first-lien term loan strip to support the acquisition of AmeriLife Group by investors led by Thomas H. Lee Partners. The seven-year covenant-lite loan includes a $390 million funded tranche and a $75 million delayed-draw component. The issuer is offering six months of 101 soft call protection on the first-lien term loan. Commitments are due by 5 p.m. ET Wednesday, Feb. 5. Audax Credit BDC holds $875,000 in principal amount of the company’s existing 1L debt due June 2026 (L+450). Holders of the company’s existing 2L debt due June 2027 (L+900) include Oxford Square Capital Corp. and Prospect Capital, each with $10M in principal amount.

AINV, TCPC, CION: Authentic Brands (B2/B) — add-on, repayment

A BofA Securities-led arranger group set price talk of 99.25-99.5 on the $400 million add-on term loan for Authentic Brands. The incremental debt would be fungible with the existing covenant-lite first-lien term loan due September 2024 (L+350). The existing loan had been quoted at 100.75–101.125 prior to the launch of the add-on. Proceeds would be used to pay down the company’s second-lien term loan, which totals $379 million, according to S&P. The add-on will increase the existing loan to about $1.6 billion. BofA, Barclays, KeyBanc Capital Markets and J.P. Morgan are arranging the deal. Commitments are due by noon ET Tuesday, Jan. 28. Holders of the company’s 2L debt due September 2025 (L+775) include Apollo Investment Corp. with $7.2M in principal amount, BlackRock TCP Capital Corp. with $14.7M and CION Investment Corp. with $3M.

BDVC, OFS: BrightSpring Health (B2/B) — repricing

Morgan Stanley and KKR Capital Markets set talk of L+325-350 with a 0% floor and a par offer price on the proposed repricing of BrightSpring Health Services’ $1.791 billion first-lien term loan due March 2026. Investors are offered six months of 101 soft call protection. The existing loan is priced at L+450, with a 0% floor. Commitments and consents are due at 3 p.m. ET on Friday, Jan. 24. The originally $1.8 billion first-lien loan was syndicated in February 2019 to back BrightSpring’s merger with PharMerica. Holders of the existing 1L debt include Business Development Corp. of America with $5M in principal amount and OFS Capital with $3M.

BBDC: Calpine Corp. (Ba3/B+/B+) — repricing

Investors received allocations of the $748.125 million repriced TLB-10 for Calpine (L+200), which was issued at par. Credit Suisse was left lead on the deal, which priced at the tight end of talk. Via the transaction, the issuer is lowering the margin on the loan from L+250; the 101 soft call protection rolls off next month. Note this is the issuer’s third repricing in recent weeks, inking a repricing of its B-5 and B-9 tranches to L+225 in December. Barings BDC holds $4.5M in principal amount of the B-5 debt due January 2024.

Audax: Corsair (B2/B) — add-on, M&A

Macquarie Capital and BNP Paribas this morning circulated price talk of L+425 with a 99.03 OID for Corsair’s $115 million add-on first-lien term loan. The issuer is offering six months of 101 soft call protection. Commitments are due Thursday, Feb. 6. Proceeds from the transactions will be used to fund the acquisition of SCUF Gaming. The issuer last tapped the loan market in October 2018 for a repricing that lowered the margin by 50 bps, to L+425; concurrently, the issuer layered in $30 million to repay revolver borrowings, increasing the first-lien term loan to $358 million. The loan includes two leverage-based step-downs. Audax Credit BDC holds $984,951 in principal amount of the existing 1L debt.

NMFC, ORCC: Dealer Tire (B2/B-) — add-on, M&A

A J.P. Morgan-led arranger group is talking Dealer Tire’s $415 million fungible add-on term loan at 99.5. Proceeds, along with $350 million of other unsecured debt, will fund the recently announced acquisition of Dent Wizard International. The arranger group also includes Jefferies, BofA Securities, BMO Capital Markets, Barclays, Goldman Sachs and RBC Capital Markets. The add-on will increase the issuer’s first-lien term loan due December 2025 (L+550, 1% floor) to roughly $1.383 billion. The issuer will reset the loan’s 101 soft call protection for six months. Commitments are due Thursday, Jan. 30. Dealer Tire also announced it would launch an offering of $350 million in 2028 senior notes to finance the acquisition of Dent Wizard, according to a company statement. The J.P. Morgan-led syndicate has slated pricing for Wednesday, Jan. 29. The non-call three year senior notes can be called at par plus 50%, and issuance would be under Rule 144A for life. Holders of the existing 1L debt include New Mountain Finance $53.5M, Owl Rock Capital Corp. with $114.2M and Owl Rock Capital Corp. II with $20.1M.

PTMN, BDVC, OCSL, OCSI: Dun & Bradstreet (B3/B-/B) — repricing

An arranger group led by BofA Securities set talk of L+400-425 with a 0% floor and a par offer price on the proposed repricing of Dun & Bradstreet’s $2.53 billion first-lien term loan due February 2026. The margin would step down by 25 bps on completion of a qualified IPO. The issuer would reset the loan’s 101 soft call protection for six months. Commitments are due Jan. 28. The loan is currently priced at L+500 with a 0% floor. The transaction looms as the first real test for repricing a B3 asset in the current market. Holders of the existing 1L debt include Portman Ridge Finance Corp. with $5M in principal amount, Business Development Corp. of America with $10M, Oaktree Specialty Lending Corp. with $10M, Oaktree Strategic Income Corp. with $5M and Oaktree Strategic Income II Inc. with $2.5M. Oaktree Specialty Lending Corp. and Oaktree Strategic Income II Inc. each hold $5M of the company’s 6.875% senior notes due August 2026.

Audax: GlobalLogic (B2/B+) — repricing

J.P. Morgan is eyeing a commitment deadline on Tuesday, Jan. 28, for the repricing of GlobalLogic’s $558 million term loan B. Talk is L+275-300 with a 0% floor at par, and the issuer will reset 101 soft call protection for six months. The term loan due August 2025 is currently priced at L+325. Audax Credit BDC holds $1.7M in principal amount of the existing 1L debt.

NexPoint: iHeartMedia (B2/B+) — repricing

An arranger group led by BofA Securities set talk of L+250-275 with a 0% floor and a par offer price on the proposed repricing of iHeartMedia’s $2.3 billion term loan due May 2026. Investors are offered six months of 101 soft call protection. Commitments are due by 4 p.m. ET Tuesday, Jan. 28. The issuer is seeking to reduce the spread from L+400. The broadcaster will repay $150 million of the term loan in connection with the repricing, leaving $2.101 billion of the term loan due May 2026 outstanding. In addition, the issuer is seeking to amend documentation, bringing it substantially in line with iHeart’s recent secured notes offerings. NexPoint Capital holds $407,413 in principal amount of the existing 1L debt at subsidiary iHeartCommunications, $114,206 of the subsidiary’s 6.375% notes due May 2026, $214,073 of its 8.375% notes due May 2027 and an equity stake valued at $1.2M along with related warrants.

ABDC, CBDC, GARS: Perforce Software (B3/B-) — repricing

Credit Suisse this morning set talk of L+ 375, with a 0% floor, at par on the proposed repricing of Perforce Software’s $798 million first-lien term loan due July 2026. The repriced loan would include six months of 101 soft call protection. The current margin is L+425, with a step-up to L+450 at 6.6x net total leverage. The repriced loan would not include the step. Commitments are due at 5 p.m. Wednesday, Jan. 29. The originally $800 million first-lien term loan was issued last year at 99.5 to back a recapitalization of the company, which levered the issuer at 5.1x/7.1x, LFI reported at the time. The loan cleared at L+450 but pricing has since declined to L+425 per the step-down. The capital structure also includes a $300 million privately placed second-lien term loan. Holders of the existing 1L debt include Alcentra Capital Corp. with $5M in principal amount, Crescent Capital BDC with $12.5M and Garrison Capital with $2.7M. Alcentra also holds $5M of the 2L debt.

BBDC, BCSF: Solenis (B3/B-) — add-on, repayment

Macquarie launched a $150 million fungible add-on to Solenis’s U.S. dollar first-lien term loan, setting a lender call by noon ET Monday, Jan. 27. Proceeds will repay a portion of the outstandings under the issuer’s $375 million revolver. The existing roughly $975 million term loan due June 2025 is priced at L+400 with a 0% floor. The original cross-border financing backed Solenis’s merger with BASF’s paper and water chemicals business and will fund a dividend to Clayton Dubilier & Rice and BASF. CD&R owns 51% of the combined company. Citi was administrative agent on the dollar and euro-denominated financing. The transaction includes a €705 million first-lien term loan and a $400 million second-lien loan due June 2026. Holders of the existing 1L debt include Barings BDC with $7.9M in principal amount and Bain Capital Specialty Finance with $13.3M. Barings BDC also holds $10.6M in principal amount of the company’s 2L debt due June 2026 (L+800).

BBDC: SS&C Technologies (Ba3/BB) — repricing

Credit Suisse and Citi launched a repricing of SS&C Technologies’ approximately $5.2 billion of term loans, seeking to cut the margin on all three tranches to L+175. The repriced loans would have a 0% floor and are offered at par; the issuer is offering to reset the 101 soft call protection for six months. The current margin on all of the existing term debt is L+225, with a step up to L+250 if net secured leverage increases above 4.75x. The repriced loan would not include the step. Commitments were due by 5 p.m. ET Friday, Jan. 24. The issuer has three tranches of covenant-lite term loans outstanding, all of which mature in April 2025: a $1.983 billion TLB-3, a $1.375 billion TLB-4 and a $1.841 billion TLB-5. The B-3 and TLB-4 typically trade as a strip. Barings BDC holds $1.7M of the existing 1L debt.

CGBD, Audax, OFS: Tank Holding (B3/B) — repricing

Morgan Stanley circulated price talk of L+350 with a 0% floor and a par offer price on Tank Holding‘s roughly $528.7 million term loan due in 2026. Investors were offered six months of 101 soft call protection. Commitments were due by 3 p.m. ET Friday, Jan. 24. The issuer last tapped the market in May for a $30 million add-on term loan (L+400) to repay revolver borrowings. Holders of the existing 1L debt include TCG BDC and TCG BDC II, each with $7,000 in principal amount; Audax Credit BDC with $1M; and OFS Capital with $2M. Additionally, TCG BDC and TCG BDC II each hold $37.4M in principal amount of the company’s 2L debt due March 2027 (L+825) and equity stakes valued at $966,000 each. – Thomas Dunford

Download LFI BDC Portfolio News 1-27-20 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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This information is for the sole use of Thomas Dunford. Copyright 2016-2020 LevFin Insights. The copying, replication or redistribution of LevFin Insights content in any form is expressly prohibited without the prior written consent of LevFin Insights.


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