LevFin Insights BDC Portfolio News 2/7/22Posted on February 8, 2022
FloWorks, Solera launch M&A financings; FSK among major debtholders
The loan market showed resilience last week amid continued stock market volatility and as expectations of rate increases and outflows from high-yield mutual funds damped appetite for fixed-rate paper. The underlying bid for loans drove a big shift in product away from high-yield, particularly in high-profile M&A situations.
Launched loan volume slid to $8.7 billion across 13 issuers last week, for $6.2 billion on a net basis. Notably, new M&A deal flow dialed back to $4.2 billion as the sellside focused on a series of larger M&A transactions already in market, and pressures away from loans may have dissuaded some issuers from moving forward without greater clarity. The common wisdom of late has been that there’s a lack of substantial M&A flow once the current deals in market have been completed.
Portfolios in brief: Holds reflect most recent reporting period available
Audax, Palmer Square, Steele Creek: Amentum (B2/B) — M&A
J.P. Morgan circulated price talk of S+425 with a 0.50% floor and a 99.5 OID on the $1.293 billion nonfungible incremental term loan backing Amentum’s planned acquisition of PAE. There is no CSA. The seven-year loan would include six months of 101 soft call protection. Commitments are due by 5 p.m. ET today. Amentum in late October agreed to acquire PAE in an all-cash transaction valued at $1.9 billion, including the assumption of debt. Closing is expected in the first quarter of 2022. The financing also includes a $550 million second-lien term loan, according to Moody’s. Amentum previously tapped the market in October 2020 for a $980 million incremental term loan due 2027 (L+475, 0.75% floor) to back its acquisition of DynCorp. Holders of that loan include Audax Credit BDC with$995K, Palmer Square Capital BDC with $1.5M and Steele Creek Capital Corp. with $995K. Holders of the first-lien debt due January 2027 (L+350, 0% floor) include Audax with $988K and Palmer Square with $4.4M.
FSK: FloWorks (B3/B-) — M&A
An RBC Capital Markets-led arranger group set talk of S+575 with a 0.5% floor at 99 on the $270 million seven-year term loan B for FloWorks International, which would support its acquisition of SemiTorr Group. The CSA will be a flat 10 bps and investors are offered six months of 101 soft call protection. Commitments are due at noon ET on Feb. 15. SemiTorr is a specialty fluid handling systems and components distributor. FloWorks earlier this month announced its acquisition of the Tualatin, Ore.-based company, which was previously backed by Transom Capital Group. The additional arrangers are UBS, Wells Fargo, BNP Paribas, Jefferies and Audax. The financing also includes a $60 million asset-based revolving credit facility. FS KKR Capital Corp. holds a total of $74.9M of the existing first-lien debt due Oct. 2026 (L+700, 1% floor), while its FS KKR Credit Opportunities Partners JV holds $24.8M.
BCRED: GardaWorld (B3/B) — M&A
J.P. Morgan launched a $700 million incremental term loan for GardaWorld Security that will fund its acquisition of Tidel Engineering. The seven-year nonfungible term loan is talked at S+400 with a 0% floor at 99.5 with six months of 101 soft call protection. There’s no CSA. The commitment deadline is 5 p.m. ET on Thursday, Feb. 10. The issuer last tapped the market in November with a $350 million fungible add-on to its TLB due 2026 (L+425, 0% floor) to fund general corporate purposes. Blackstone Private Credit Fund holds $22.5M of that loan.
ARCC, CION: NAPA Management (B2/B) — Refinancing, GCP
A Barclays-led arranger group today set price talk of S+525 with a 0.75% floor and a 99 OID on the $610 million term loan for NAPA Management Services Corp. The loan would include a CSA of 10 bps/15 bps/25 bps for one-month, three-month and SOFR, respectively. The seven-year loan would carry six months of 101 soft call protection. Proceeds will refinance debt and fund cash to the balance sheet. The company currently has about $555 million of debt outstanding, according to ratings reports. The issuer’s current debt includes a first-lien term loan due April 2023 (L+500), with holders including CION Investment Corp. with $5.3M. The current balance sheet also includes a second-lien term loan due October 2023 (L+1,000); holders include Ares Capital with $72.8M.
FSK: Solera (B3/B-) — M&A
A J.P. Morgan-led arranger group launched a $300 million fungible add-on term loan for Solera Holdings backing its acquisition of Spireon Holdings, a provider of GPS-based solutions to commercial fleet, franchise dealership and independent dealership customers. The loan would be fungible with Solera’s U.S. dollar term loan B due June 2028 (L+400, 0.5% floor) and is offered at 99-99.5. Note that Goldman Sachs is administrative agent. Commitments are due by noon ET on Wednesday, Feb. 8. FS KKR Capital Corp. holds $312.4M of the second-lien term loan due June 2029 (L+800, 1% floor).
BCRED: Virtusa (B3/B) — Dividend
A BofA Securities-led arranger group bumped up the deadline on the $590 million term loan for Virtusa to noon ET tomorrow, Feb. 8. Proceeds, along with those from a $130 million fungible add-on to its 7.125% notes due 2028, will fund a dividend. There’s no update to price talk of S+375-400 with a 0.75% floor at 99-99.5. The CSA is set at 10 bps/15 bps/25 bps for one-month, three-month and six-month SOFR. The seven-year loan would include six months of 101 soft call protection. Arrangers are BofA, Barclays, Goldman Sachs, Deutsche Bank, HSBC and Nomura. The issuer in September repriced its $599 million term loan due 2028 to L+375 with a 0.75% floor, also via an arranger group led by BofA Securities. Existing holders are offered a 50 bps consent fee. Blackstone Private Credit Fund holds about $17.4 million of the existing first-lien debt.
CCAP: The Knot/WeddingWire (B3/B) — Refinancing
J.P. Morgan launched a $175 million add-on first-lien term loan for The Knot, proceeds of which would be used to refinance the issuer’s second-lien term loan. Also as part of the transaction, the issuer is amending its existing $437 million first-lien loan to migrate to SOFR-based pricing and revise the change-of-control language, among other documentation changes. Price talk is S+450, with a 0% floor and a 99.5 OID on the new money; the CSA is a flat 10 bps regardless of tenor. Lenders to the existing loan, currently priced at L+450 with a 0% floor, are offered a 25 bps consent fee. It would include two 25 bps leverage-based step-downs, set at a quarter-turn and half-turn inside total first-lien net leverage, respectively. The 101 soft call protection would be refreshed for six months on the pro forma $611 million tranche, which would have the same December 2025 maturity as the existing loan. Holders of the existing second-lien debt include Crescent Capital BDC with $5M.
Download LFI BDC Portfolio News 2-7-22 for BDC investment details provided by Advantage Data; click through links to view stories by LFI.
– Lisa Allen
Disclaimer: The information on this blog site is for informational purposes only. Advantage Data makes no representations as to the accuracy, completeness, suitability, or validity, of any information. Advantage Data will not be liable for any errors, omissions, or any losses, injuries, or damages arising from its display or use. All information is provided AS-IS with no warranties and confers no rights. Information is not and should not be considered professional financial investment advice. In all events, Advantage Data is not a broker-dealer, shall not operate as a broker or a dealer, is not holding itself out as a broker or dealer and is not engaged in the business of buying or selling securities or otherwise required to register with the National Association of Securities Dealers.
Are you using AdvantageData?
AdvantageData is your fixed income solution for pricing, analytics, reports, and insight on approximately:
- 500,000+ U.S. and international corporate bonds
- Over 300,000+ BDC fair value assessments dating back to 2000
- Over 22,000+ syndicated loans
- Over 100 equity markets worldwide
- One platform 15 products and services from debt to loans to mid-market
- Used by top buy and sell-side firms worldwide