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LevFin Insights BDC Portfolio News 12/21/20

Posted on December 22, 2020

Arrangers clearing out business before holidays; KIK Custom Products to refinance debt held by ICMB, OSCL JV, OSCI

Download: LFI BDC Portfolio News 12-21-20

Underwriters pushed to wrap business last week, and investors obliged, showering commitments on numerous loans and pushing pricing tighter on a parade of transactions, leaving very little left to finish ahead of the holiday break. Bonds were similarly hot, as high-yield racked up the most December issuance for any one week on record, at $14 billion, with heavily oversubscribed transactions, aggressive pricings and post-break gains.

While cleaning up the remaining deals left in the primary commanded nearly all of the market’s attention, demand for loans continued to propel the secondary incrementally higher. As of Thursday’s close, the average bid of Credit Suisse Leveraged Loan Index stood at 95.66, up a further 18 bps from 95.48 from last week’s final reading.

The average discounted spread to a three-year-maturity, DM3YR, of Index loans tightened another seven basis points this week to L+490 as of Thursday’s reading.

The average DM3YR now stands 785 bps tight of its post-Great Recession high of L+1275 on March 23 but remains 37 bps wide of its pre-bear market read of L+453 on Feb. 19.

Portfolios in brief: Holds reflect most recent reporting period available

CCAP: ExamWorks (B2/B) — add-on, M&A

Investors received allocations of the $125 million add-on term loan for ExamWorks (L+325, 1% floor), which was issued at 99.875. BofA Securities was left lead on the rare drive-by transaction, which priced tight to original talk. Proceeds would support the issuer’s acquisition of Sedgwick’s group health peer review and independent medical examination assets. The Leonard Green & Partners-controlled company is a provider of independent medical examinations, peer reviews, bill reviews, Medicare compliance services and IME-related services. Crescent Capital BDC holds $5.7M in principal amount of the company’s 2L debt due July 2024 (L+725, 1% floor) together with an equity stake valued at $1.5M.

NexPoint, OCSL, OCSI: Global Medical Response (B2/B) — add-on, GCP

Investors received allocations of Global Medical Response’s $350 million add-on term loan (L+475, 1% floor), which was issued at 99.5. KKR Capital Markets was left lead on the deal, which priced in line with talk with a $200 million upsize. The add-on will be fungible with the recently syndicated $1.64 billion term loan due October 2025 Proceeds are general corporate purposes, which may include funding potential acquisitions and/or repayment of outstanding debt. The provider of air ambulance services, formerly known as Air Medical Group, is controlled by KKR. Holders of the existing 1L debt include NexPoint Capital with $3.4M in principal amount, Oaktree Specialty Lending Corp. with $6.3M, Oaktree Strategic Income Corp. with $2.5M and Oaktree Strategic Income II with $1.1M.

ICMB, OSCL, OSCI: KIK Custom Products (B3/B-) — dividend

Investors received allocations of the $900 million term loan B for KIK Custom Products (L+450, 0.75% floor), which was issued at 99. Barclays was left lead on the deal, which priced tight to original talk with a $125 million shift from the adjoining first-lien bond deal and revisions to documentation. The documentation entailed investor-friendly changes such as the removal of a proposed 12-month sunset as well as issuer-friendly revisions to the portability language. Proceeds, along with those from a $475 million first-lien bond deal and $525 million of unsecured notes, will be used to refinance existing debt and fund a $484 million dividend. Centerbridge Partners-controlled KIK Custom Products manufactures household cleaning products, including bleach, as well as pool and spa additives and automotive fluids. Holders of the company’s exiting 1L term debt due May 2023 (L+400, 1% floor) include Investcorp Credit Management BDC with $5M in principal amount, Senior Loan Fund JV I LLC with $8M, Oaktree Strategic Income Corp. with $5M and Oaktree Strategic Income II with $2M.

CGBD, OFS, Audax: Tank Holding (B3/B-) — incremental, dividend

Investors received allocations of the $240 million incremental term loan for Tank Holding (L+500, 0.75% floor), which was issued at 98.5. Morgan Stanley was left lead on the deal, which priced inside of original talk. Proceeds will be used, along with a privately placed $30 million incremental second-lien financing, to fund a $231 million shareholder dividend and acquisitions under letters of intent. Alongside the new facility, Tank is amending its existing $518 million first-lien term loan B due March 2026, which was repriced to L+350 with a 0% floor, from L+400 in January. Consenting lenders are offered a 25 bps fee, sources noted. Olympus Partners-controlled Tank Holding manufactures proprietary rotational molded polyethylene and steel storage tanks and containers used in above-ground, below-ground and portable applications. Holders of the company’s existing 1L debt include TCG BDC and TCG BDC II with $20,000 each in principal, OFS Capital with $2M and Audax Credit BDC with $993,000. In addition, TCG BDC holds $37.4M in 2L debt due March 2027 (L+825) and an equity stake valued at $943,000, while TCG BDC II holds $37.4M of the 2L debt and an equity stake valued at $944,000. – Thomas Dunford

Download LFI BDC Portfolio News 12-21-20 for BDC investment details provided by Advantage Data; click through links to view stories by LFI. – Thomas Dunford

thomas.dunford@levfininsights.com

212.205.8552

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