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LevFin Insights BDC Portfolio News 3/22/21

Posted on March 22, 2021

Virgin Pulse in market with dividend recap; FSK vehicles hold nearly $300M combined of company’s existing debt

With arrangers pushing to wrap a slate of opportunistic loan transactions, late-week deal revisions showed that pushback is emerging on the most aggressive transactions even as the market remains issuer-friendly with a stunning 17 deals tightening. A pair of transactions, including one just off pre-marketing, were shelved, while other issuers walked back terms or pricing. Meanwhile, high-yield pressed on despite nipping outflows and rate concerns, for another solid week of volume.

On some level, sloppiness toward the end of the week was a function of a crowded market; this week, at least for now, offers fewer launches and a more reasonable string of deadlines distributed throughout the week.

Pushback at the margin was supported by a loan secondary that ended the week a touch softer as accounts continued to absorb the steady flow of allocations, with the average bid price of the Credit Suisse Leveraged Loan Index easing to 97.56% of par as of Thursday’s close, down 13 bps from the previous Friday’s close of 97.69. It was a relatively uneventful week in the secondary in terms of credit-specific news with earnings season winding down and the hectic primary commanding investors’ attention, though a $453 million BWIC emerged midweek that was rumored to be a called CLO.

Portfolios in brief: Holds reflect most recent reporting period available

Audax: DuBois Chemicals (B3/B-) — refinancing

Investors received allocations of Dubois Chemicals’ $90 million add-on term loan (L+450, 0% floor), which was issued at 99.25. J.P. Morgan was left lead on the deal, which priced tight to talk. Proceeds refinance first-lien secured notes, including $40 million outstanding and a $50 million delayed-draw component that isn’t currently drawn; refinance revolver outstandings; and fund GCP. Altas Partners backed Dubois Chemicals is a provider of specialty cleaning chemical solutions and services. Audax Credit BDC holds $1.8M in principal amount of the 1L debt due September 2026 and $3M of the company’s 2L debt due September 2027 (L+850).

BDVC, PTMN: Edelman Financial Engines (B3/B) — dividend

Edelman Financial Engines’ upsized and extended $2.226 billion first-lien term loan (L+375, 0.75% floor) was issued at 99.5 on the $800 million new money tranche and 99.875 on the $1.426 billion extended amount. Morgan Stanley was left lead on the loan, which priced wide of talk. The $100 million add-on second-lien term loan (L+675, 0% floor) was issued at 99. J.P. Morgan was left lead on the deal, which priced in line with talk. New-money proceeds fund a $1.072 billion dividend, while first-lien maturity is extended from 2025 with a pricing increase from L+300 with a 0% floor. Warburg Pincus is making a minority investment in the financial planning and investment management firm alongside current sponsor Hellman & Friedman. Holders of the existing 2L debt include Business Development Corp. of America with $8.9M in principal amount and Portman Ridge Finance Corp. with $300,000.

Audax: MedRisk (TBD/TBD) — LBO

A UBS-led arranger group set talk of L+350-375 with a 0.5% floor and a 99.5 offer price on the $750 million term loan B backing CVC Capital’s acquisition of a majority interest in MedRisk. Financing also includes a $100 million revolver and a $300 million second-lien loan that has been placed privately. Commitments are due March 31. The transaction will leverage MedRisk at 5.3x first-lien and 7.4x total, with net leverage at 5.2x/7.4x. Arranger on the deal are UBS, BofA Securities, Macquarie, Truist and Societe Generale. Carlyle Group, MedRisk’s current majority owner, will retain a significant stake and maintain joint control in partnership with CVC. Audax Credit BDC holds $2.5M in principal amount of the company’s 1L debt due December 2024 (L+275) and $2.1M of the 2L debt due December 2025 (L+675).

CION, FSK: One Call Medical (B3/B-) — refinancing

A J.P. Morgan-led arranger group has launched a $700 million, six-year first-lien term loan for One Call. Proceeds, along with a $450 million issue of second-lien notes that is being placed privately, would refinance the issuer’s existing capital structure, including the $641 million outstanding under the company’s extended term loan due November 2022 (L+525, 1% floor). The arrangers are circulating price talk of L+475-500, with a 0.75% floor and a 99 OID, with six months of 101 soft call protection. J.P. Morgan, Wells Fargo, Jefferies, CIT Group, KKR Capital Markets and Blackstone are arranging the deal; J.P. Morgan will be administrative agent. Commitments are due by 5 p.m. ET Monday, April 5. Holders of the existing 1L debt include CION Investment Corp. with $3.9M in principal amount, FS KKR Capital Corp. with $4.9M and FS KKR Capital Corp. II with $2.9M. FS KKR Capital Corp. and FSK Capital Corp. II also hold equity stakes in the company.

AINV: Soliant Health (B2/B+) — refinancing, dividend

J.P. Morgan set price talk of L+425-450 with a 0.75% floor and a 99 OID on the $300 million term loan for Soliant Health. The seven-year loan would include six months of 101 soft call protection. Proceeds would refinance $250 million of existing debt and fund a $40 million shareholder dividend. Commitments are due at noon ET Thursday, March 25. The transaction marks the issuer’s debut in the broadly syndicated institutional loan market. LFI reported in January 2020 that the company inked a $310 million credit facility to back Olympus Partners’ acquisition of the business, a national provider of healthcare jobs and staffing services. In connection with the proposed recapitalization, J.P. Morgan will assume the role of administrative agent from MidCap Financial. Apollo Investment Corp. holds an equity stake valued at $289,000.

NMFC, PFLT, Guggenheim: Teneo Holdings (B2/B) — M&A

Goldman Sachs set a 98.5-99 offer price on the $150 million add-on term loan for Teneo, proceeds of which would be used to fund the acquisition of Deloitte’s U.K. restructuring business. The incremental debt will be fungible with the borrower’s existing term loan due 2025 (L+525, 1% floor). Commitment are due Tuesday, March 30. The issuer will reset 101 soft call protection for six months. The originally $370 million term loan was syndicated in 2019 to back CVC Capital Partners’ acquisition of a majority stake in the business from BC Partners, though the issuer last year privately placed a $100 million add-on term loan to fund near-term acquisitions. Holders of the existing 1L debt include New Mountain Finance with $9.9M in principal amount, PennantPark Floating Rate Capital with $9.9M and Guggenheim Credit Income Fund with $3.7M.

FSK: Virgin Pulse (B3/B-) — dividend

A KKR Capital Markets-led arranger group outlined talk of L+400 with a 0.75% floor and a 99 offer price on Virgin Pulse’s $505 million first-lien term loan, while left lead J.P. Morgan set talk of L+750 with a 0.75% floor at 98.5-99 on the deal’s $185 million second-lien term loan. The first- and second-lien deal backs a dividend recapitalization of the Marlin Equity portfolio company. The seven-year first-lien term loan carries six months of 101 soft call protection, while the eight-year second-lien term loan carries 102, 101 hard call protection. Morgan Stanley and UBS also are arranging the deal. The commitment deadline will be 5 p.m. ET March 29. Holders of the company’s existing 1L debt due May 2025 (L+600) include FS KKR Capital Corp. with $135.8M in principal amount and FS KKR Capital Corp. II with $158.2M. – Thomas Dunford

homas.dunford@levfininsights.com

212.205.8552

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