LevFin Insights BDC Portfolio News 10/19/20Posted on October 19, 2020
Zywave circulates price talk on LBO financing; existing debtholders include ARCC, BCSF, NMFC, CION, CGBD
With flaring concerns over a stimulus package and Covid-19 spurring volatility in equities, new-issue activity decelerated in high-yield during the short week after an early burst of deal flow, with clear comfort for seasoned names. However, there didn’t seem to be much pressure on loan demand, with a handful of deal announcements Friday and players forecasting another busy week ahead.
A less propulsive market, at least away from new issues, was on display as loan prices eased a touch through Thursday’s reading of the Credit Suisse Leveraged loan index, to 93.32 from 93.36 at the end of the previous week, but not before hitting a 93.40 four-week high on Wednesday.
After Thursday’s action, the average CS Index Bid was:
- Down 3.4 points/3.5% since the bear market commenced on Feb. 20
- Down 3.2 points/3.3% year-to-date
- Up 16.8 points/22.0% since the recent low of 76.48 on March 23
FSK, PNNT, PFLT, SUNS, NexPoint: Advantage Solutions (B3/CCC+) — refi
An arranger group led by BofA Securities launched Advantage Solutions’ refinancing, setting a $1.6 billion term loan B talked at L+450 with a 0.75% floor at 98.5. Arrangers are BofA, Morgan Stanley, Deutsche Bank and Apollo. Commitments are due at 5 p.m. ET on Thursday, Oct. 22. The transaction was launched in connection with its deleveraging acquisition by special purpose acquisition company Conyers Park II. The arrangers earlier committed to provide a $2.1 billion term loan and a $400 million asset-based revolver, according to the company, while investors were told that the balance of the original debt commitment would be structured as “other secured debt.” Proceeds from the new TLB and up to $1.15 billion of equity would be used to refinance the issuer’s existing net debt of $2.898 billion, which includes a B-1 term loan due July 2021 (L+325, 1% floor) and a second-lien term loan due July 2022 (L+650, 1% floor) and pay fees and expenses. Holders of the existing B1 debt due July 2021 include FS KKR Capital Corp. with $11.1M in principal amount, FS KKR Capital Corp. II with $5.7M, PennantPark Investment with $8.7M, PennantPark Floating Rate Capital with $3.2M and Solar Senior Capital with a combined $12.9M. Holders of the 2L debt due July 2022 include FS KKR Capital Corp. II with $8.1M in principal amount and NexPoint Capital with $3M.
BBDC: Ascend Learning (B3/B-) — incremental, dividend
A Barclays-led arranger group sweetened talk on Ascend Learning’s $350 million incremental term loan to L+375 with a 1% floor at 99 from a range of L+325-350 with a 99–99.5 OID. Proceeds fund a dividend. The term loan will be coterminous, but not fungible, with issuer TLB due July 2024. The incremental term loan will include six months of 101 soft call protection. Arrangers are Barclays, BofA Securities, Deutsche Bank, Morgan Stanley and RBC Capital Markets, with Blackstone as a co-manager. Ascend Learning in 2017 tapped the loan market for a $700 million term loan B due July 2024 (L+300, 1% floor). Proceeds, along with those from a $300 million issue of 6.875% notes due 2025, supported Blackstone and Canada Pension Plan Investment Board’s purchase of Ascend Learning from Providence Equity Partners and Ontario Teachers’ Pension Plan. A subsequent $350 million mirror bond deal funded a dividend. Barings BDC holds $4.9M in principal amount of the existing TLB debt.
AB, GSBD, GBDC: E2open (TBD/TBD) — M&A
Goldman Sachs, Credit Suisse and Golub Capital this afternoon launched a $525 million term loan B backing E2open’s planned merger with a CC Neuberger Principal Holdings I, a special purpose acquisition company. A lender call is scheduled for 10 a.m. ET Tuesday, Oct. 20. Proceeds from the new TLB and up to $1.13 billion of equity will be used to refinance the issuer’s existing net debt, distribute cash to existing shareholders, place cash on balance sheet for working capital and pay related fees and expenses. Net debt at closing is expected to be $500 million. The issuer will also be putting in place a $75 million revolver. Holders of the company’s existing unitranche debt due November 2024 (L+575, 1% floor) include AB Private Investors Corp. with $4.9M, Goldman Sachs BDC with $16.2M, Goldman Sachs Middle Market Lending Corp. with $24.1M, Golub Capital BDC with $86.1M and Golub Capital BDC 3 with $22.8M.
BBDC: Filtration Group (B3/B) — incremental, dividend
Investors received allocations of the $400 million incremental term loan for Filtration Group (L+375, 0.75% floor), which was issued at 99.5. Goldman Sachs was left lead on the deal, which priced tight to talk. Proceeds fund a dividend. Filtration Group, a manufacturer and supplier of filtration products for the HVAC, industrial and process, liquid and safety markets, is owned by Madison Industries. Barings BDC holds $4.7M in principal amount of the company’s existing 1L debt due March 2025 (L+300, 0% floor).
FSK: Pretium Packaging (B3/B) — div recap
Credit Suisse and KKR Capital Markets went out with price talk on the first- and second-lien financing for Pretium Packaging, circulating guidance of L+400-425, with a 0.75% floor and a 99 OID, on the first-lien term loan. The second-lien is talked at L+800-825, with a 0.75% floor and a 98.5 OID. Proceeds will be used to refinance existing debt and fund a dividend. The covenant-lite transaction includes a $530 million first-lien term loan and a $170 million second-lien term loan. The seven-year first-lien term loan would carry six months of 101 soft call protection while the eight-year second-year term loan would have 102, 101 call premiums. Commitments are due by 5 p.m. ET Wednesday, Oct. 28. Pretium Packaging holds a combined $39.9M in principal amount of the company’s 1L debt due January 2027 (L+625, 1% floor), while FS KKR Capital Corp. II holds $133.6M.
BBDC, Audax, BDVC: ProAmpac (B3/B-) — add-on, extension
Antares Capital, J.P. Morgan and Goldman Sachs set a 50 bps fee on the roughly two-year extension of ProAmpac’s approximately $1.351 billion term loan alongside a $114 million fungible add-on to the tranche that’s talked at L+350 with a 1% floor at 99.5. There’s no change to current pricing, but the extended loan due 2025 would include six months of 101 soft call protection Commitments and extension consents are due on Oct. 26. Also as part of the transaction, the issuer is increasing its revolver by $75 million to $200 million and privately placing $360 million of second-lien notes to refinance its existing $215 million second-lien term loan due 2024 (L+850, 1% floor), which is callable at par. The remainder of the proceeds of the second-lien and the incremental first-lien debt will be used to finance a planned acquisition and repay revolver borrowings. The existing first-lien term loan currently matures in November 2023 and is priced at L+350, with a 1% floor, with a step to L+325 at 4.25x net first-lien leverage. Holders of the existing 1L debt include Barings BDC with $9.8M in principal amount and Audax Credit BDC with $3M. Business Development Corp. of America holds $3.4M in principal amount of the company’s 2L debt.
ARCC, Audax, CGBD: Sovos Brands (B3/B) — M&A, refi
A Credit Suisse-led arranger group set price talk of L+425-450, with a 0% floor and a 99 OID on the $380 million first-lien term loan for Sovos Brands. The seven-year covenant-lite loan would include six months of 101 soft call protection. Commitments are due at 5 p.m. ET Thursday, Oct. 22. Proceeds fund the acquisition of Birch Benders and refinance existing debt. Pro forma net leverage runs 3.6x, all senior. Sovos Brands in late August announced it agreed to purchase Birch Benders, a producer of pancake and waffle mixes, toaster waffles and pancake and baking cups. The purchase price was not disclosed; closing is expected by the end of October. The issuer’s existing term loan (L+500, 0% floor), originally $280 million, was syndicated in November 2018 to finance the acquisition of Noosa Yoghurt. Holders of the existing 1L debt include Ares Capital Corp. with $6.8M, Audax Credit BDC with $2M, and TCG BDC and TCG BDC II, each with $19.8M.
Monroe: Wheel Pros (B3/B-) — div recap
UBS set talk of L+500-525 with a 1% floor and a 98.5 OID on the first-lien term loan tranche of its dividend recapitalization for Wheel Pros. The seven-year first-lien tranche carries six months of 101 soft call protection. Proceeds of the $735 million first-lien term loan and $210 million second-lien term loan will refinance debt and fund the distribution. Second-lien talk hasn’t emerged. The issuer also is putting in place a $100 million five-year asset-based revolver. Commitments are due on Oct. 28. A UBS-led arranger group last year placed a $326 million add-on to Wheel Pros’ first-lien term loan due April 2025 (L+475), increasing the tranche to $554 million. Proceeds, along with a $90 million privately placed second-lien term loan, funded an acquisition. Antares arranged financing for Clearlake Capital’s 2018 acquisition of the business. That transaction included a $70 million second-lien term loan due April 2026 (L+850). Monroe Capital Income Plus Corp. holds $2.5M of the existing 1L debt.
ARCC, BCSF, NMFC, CION, CGBD: Zywave (TBD/TBD) — LBO
A Morgan Stanley-led arranger group set talk of L+400 with a 0.75% floor and a 99-99.5 offer price on its LBO loan for Zywave. The deal includes a $50 million revolver and a $350 million first-lien term loan. Proceeds, alongside a privately placed second-lien term loan, will finance the acquisition of Zywave, and provide for working capital needs and general corporate purposes. The seven-year TLB includes six months of 101 soft call protection. Arrangers are Morgan Stanley, Credit Suisse, Antares Capital, Ares and Golub Capital. Morgan Stanley is administrative agent. Commitments are due at noon ET on Tuesday, Oct. 27. Holders of the company’s existing 1L term debt due November 2022 (L+500) include Ares Capital Corp. with $200,000, Bain Capital Specialty Finance with $17.3M and New Mountain Finance with a combined $2M in drawn and undrawn debt. Holders of the company’s 2L debt due November 2023 (L+900) include Ares Capital Corp. with a combined $19.4M, CION Investment Corp. with $3.4M, New Mountain Finance with a combined $7.6M and TCG BDC with $468,000.
Holders of the company’s existing revolver debt due November 2022 (L+500) include Ares Capital Corp. with $2.6M and Bain Capital Specialty Finance with $320,000. – Thomas Dunford
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