LevFin Insights BDC Portfolio News 10/25/21Posted on October 25, 2021
Ivanti Software reduces margin on $1.751B first-lien loan; several vehicles list the credit among holdings
The reception for new-issue loans has grown increasingly bifurcated in recent days as underwriters pushed a series of challenging M&A-related transactions through a crowded market. However, strong reception for some issuers has emboldened arrangers to roll out a fresh slate of opportunistic deals, and that is expected to continue in the coming weeks. Moreover, accounts have been constructive in finding clearing levels, allowing arrangers to clear out a huge volume of business. High-yield, too, kept humming, with issuers pricing more than $9 billion of transaction volume.
New loan activity was $13.5 billion, and $8.2 billion on a net basis, across 17 issuers. Most notably, opportunistic activity outpaced M&A for the second consecutive week with $7.9 billion hitting the market from nine issuers. Flex activity was heavy in both directions, with 11 deals tightening and eight others (officially) moving wider. It’s the most upward flexes since the week of Aug. 6, when there were also eight, and to find more upwards flexes in one week, you need to go back to 2018.
Portfolios in brief: Holds reflect most recent reporting period available
Audax, NMFC, ORCC, PFLT: Confluent Health (B3/B-) — Refi, M&A
A Deutsche Bank-led arranger group outlined talk of L+400-425 with a 0.5% floor and a 99 offer price on the $565 million term loan financing for Confluent Health. Proceeds would be used to refinance the company’s term loan B as well as fund identified acquisitions. The financing is split between a $465 million funded term loan and a $100 million delayed-draw component. The DDTL is available for 24 months, with ticking fees of 505% of the margin for days 46-90 and 100% of the margin beginning day 91. The seven-year covenant-lite loan would include six months of 101 soft call protection. Commitments are due by 5 p.m. ET Wednesday, Oct. 27. Holders of the company’s 1L debt due June 2026 (L+500, 0% floor) include Audax Credit BDC with $3.4M in principal amount, New Mountain Finance with $27M, NMF SLF I with $16.8M, Owl Rock Capital Corp. with $17.6M, Owl Rock Capital Corp. II with $4.4M, PennantPark Floating Rate Capital with $3.9M and NMFC Senior Loan Program III with $4.4M.
Palmer Square, Steele Creek: Hamilton Projects Acquiror (NR/NR) — Repricing
Morgan Stanley set price talk of L+450 with a 0.75% floor and a 99.75 OID on the proposed repricing of Hamilton Projects Acquiror’s $888.75 million senior secured term loan B due June 2027. Current pricing is L+475 with a 1% floor. The issuer is offering to reset the 101 soft call protection for six months. Commitments are due by 5 p.m. ET Wednesday, Oct. 27. The originally $900 million term loan was syndicated in June 2020 to back Carlyle Power Partners and EIG Management’s acquisition of the Liberty Energy Center and Patriot Energy Center. The loan is governed by a 1.1x debt service coverage ratio, with an excess-cash-flow sweep set at 75% with a target debt balance, stepping down to 50% at 3x leverage. Holders of the existing 1L debt include Palmer Square Capital BDC with $3.8M and Steele Creek Capital Corp. with $990K.
Palmer Square, Audax, BCRED, OFS, BC Partners, OCSL, Owl Rock, SIRR: Ivanti Software (B3/B-/B) — Repricing
Investors received allocations of the $1.751 billion repriced first-lien term loan for Ivanti Software (L+425, 0.75% floor), which was issued at 99.75. Morgan Stanley was left lead on the deal, which priced wide of talk. Via the transaction, the issuer is reducing pricing from L+475 with a 1% floor; the transaction is slated to close when the 101 soft call protection rolls off the existing loan Dec. 1. Concurrently, the issuer is repricing its $545 million second-lien term loan and shifting it to a broadly syndicated loan, from a privately placed one. Talk is L+700-725 with a 0.50% floor and a 99.5-99.75 OID, versus the current coupon of L+850 with a 1% floor. The IT and security concern, formerly LANDESK, is controlled by Clearlake Capital Group, TA Associates and Charlesbank Capital Partners. Holders of the company’s existing 1L debt include Palmer Square Capital BDC with a combined $6M in principal amount, Audax Credit BDC with $3M, Blackstone Private Credit Fund with a combined $29M, OFS Capital with $6M, BC Partners Lending Corp. $4M and Sierra Senior Loan Strategy JV I with $5M. Holders of the company’s existing 2L debt include Oaktree Specialty Lending Corp. with $17.3M, Oaktree Strategic Income II with $8M, Owl Rock Technology Finance Corp. with $21M and Sierra Income Corp. with $6M.
TSLX, ORCC: Motus (B3/B-/B-) — LBO
An arranger group led by RBC Capital Markets set talk of L+375-400 with a 0.5% floor and a 99 offer price on the $390 million first-lien term loan for Motus supporting Permira’s investment in the issuer alongside existing sponsor Thoma Bravo. The seven-year TLB would include six months of 101 soft call protection. The transaction also includes a privately placed $135 million second-lien term loan. Permira is taking a 48% stake in the business, equal to that of Thoma Bravo, with management holding the balance. Commitments are due at noon ET on Tuesday, Nov. 2. Holders of the company’s 1L debt due January 2024 (L+550, 1% floor) include Sixth Street Specialty Lending with $61.5M in principal amount and Owl Rock Capital Corp. II with $6.5M. Owl Rock Capital Corp. holds $59M in principal amount of 1L debt listed with an L+636 margin. Sixth Street Specialty Lending also holds an equity stake valued at $5.4M.
Audax, BCRED: TricorBraun (B3/B-) — M&A
An arranger group led by Credit Suisse launched a $150 million add-on term loan for TricorBraun Holdings, guided with a 98.8 OID. Proceeds would support an acquisition. The add-on would be fungible with the existing term loan due March 2028 (L+325, 0.5% floor). The call protection on the loan has already rolled off. Commitments are due by noon ET on Tuesday, Oct. 26. Holders of the existing 1L debt include Audax Credit BDC with $1.5M in principal amount and Blackstone Private Credit Fund with $11.4M.
FSK, PTMN: WireCo WorldGroup (B2/B) — Refinancing
J.P. Morgan, BofA Securities and Jefferies set price talk of L+425 with a 0.50% floor and a 99 OID on the $540 million term loan B for WireCo WorldGroup. Proceeds of the seven-year TLB will refinance the issuer’s $424 million first-lien term loan due September 2023 (L+500, 1% floor) and its $115 million second-lien term loan due 2024. Lenders are offered six months of 101 soft call protection. Credit Opportunities Partners JV, a joint venture between FS KKR Capital Corp. and South Carolina Retirement Systems Group Trust, holds $100K in principal amount of the existing 1L debt. Holders of the company’s second-lien debt due September 2024 (L+900, 1% floor) include FS KKR Capital Corp. with $16.2M, Credit Opportunities Partners JV with $9.6M and Portman Ridge Finance Corp. with $2.8M. – Thomas Dunford
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