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LevFin Insights BDC Portfolio News 4/26/21

Posted on April 27, 2021

Aspect Software, Spartech outline pricing on LBO financing; existing debtholders include FSK, FSKR and Audax

More balanced market conditions continued to reign in the loan market, as investors won concessions and tradeoffs for tighter pricing on well-regarded deals amid another heavy week of new-money allocations. Bond issuance, meanwhile continued at its recent torrid pace, shrugging off yet another week of mutual fund outflows.

Technical conditions in loans arguably augur more of the same in the coming week. The secondary drifted slightly lower in the first half of the week, though the tone improved later in the week despite another heavy week of new-money allocations—much of which hit late Thursday afternoon—as evidenced by a $161.4 million OWIC that hit the market Thursday morning. Through Thursday’s close, the average bid price of the Credit Suisse Leveraged Loan Index slid to 97.57% of par, down eight bps from last Friday’s close of 97.65.

Portfolios in brief: Holds reflect most recent reporting period available

PTMN, CCAP, Audax: Allied Universal (B2/B/B) — M&A

A Credit Suisse-led bookrunner group circulated price talk for Allied Universal’s cross-border term loan B at L/E+375-400 with a 99 OID and a 0.75% floor for the U.S. dollar tranche and 0% floor for the euro loan. The loan would comprise a $950 million dollar tranche and a €715 million euro tranche. The seven-year covenant-lite loan would carry six months of 101 soft call protection. Commitments are due by 5 p.m. ET Tuesday, May 4. In addition to being left lead on both tranches, Credit Suisse would be administrative agent. The additional bookrunners are Morgan Stanley, Deutsche Bank, HSBC, Mizuho, Societe Generale, ING, MUFG and Truist. Holders of the company’s existing 1L debt due July 2026 (L+425, 0% floor) include Portman Ridge Finance Corp. with $5.2M in principal amount and Audax Credit BDC with $2.5M. Crescent Capital BDC holds an equity stake valued at $2.7M.

FSK, FSKR: Aspect Software (B3/B-) — LBO

A Jefferies-led arranger group set talk of L+450-475 and a 99 offer price on Aspect Software’s first-lien term loan and outlined the second-lien term loan at L+850 at 98. Both loans are subject to a 0.75% floor and would include a step-down following an IPO. The financing, which backs the acquisition of the issuer and Noble Systems Corp. by Abry Partners, includes a $610 million seven-year first-lien term loan, a $250 million eight-year second-lien term loan and a $75 million five-year revolving credit facility. The first-lien term loan would include six months of 101 soft call protection, while the second-lien would carry 102, 101 hard call premiums in years one and two, respectively. The commitment deadline is noon ET Friday, April 30. FS KKR Capital Corp. holds $700,000 in principal amount of the company’s 1L debt due July 2023 (L+500, 1% floor) and an equity stake valued at $300,000. FS KKR Capital Corp. II holds a combined $12.3M in principal amount of the 1L debt, warrants valued at $1.4M and an equity stake valued at $2M.

Monroe, CION: Avison Young (B2/B-) — add-on, GCP

A Credit Suisse-led arranger group launched a $50 million add-on term loan for Avison Young, proceeds of which would be available for general corporate purposes, including tuck-in acquisitions. The arrangers are circulating price talk of L+600 with a 0% floor and a 99 OID. The incremental debt would be fungible with the borrower’s existing $318 million covenant-lite term loan due January 2026, which is currently priced at L+500, with a 0% floor, but would be repriced upwards to match the coupon on the incremental debt. The commercial real estate concern is offering to reset the 101 soft call protection for six months. Pro forma for the add-on, the tranche would grow to $368 million. Commitments are due by 5 p.m. ET Tuesday, April 27. Holders of the existing term debt include Monroe Capital Income Plus Corp. with about $2M in principal amount and CION Investment Corp. with $9.8M.

ARCC: Beacon Roofing Supply (Ba3/B+) — Refinancing

Investors received allocations of Beacon Roofing Supply’s $1 billion term loan B (L+250, 0% floor), which was issued at 99.5. Citi was left lead on the deal, which price at the wide end of talk. Proceeds, along with cash from asset sales and new senior notes refinance the issuer’s debt. Nasdaq-listed Beacon Roofing Supply is largest publicly traded distributor of roofing materials and complementary building products in the U.S. and Canada. Ares Capital Corp. holds an equity stake valued at $39.3M.

Audax: Duravant (TBD/TBD) — incremental, M&A, GCP

A Jefferies-led arranger group set price talk of L+725, with a 0.75% floor and a 99 OID on the $175 million incremental second-lien term loan for Duravant. The eight-year loan would carry 102, 101 hard call premiums in years one and two, respectively. Proceeds are to fund acquisition of Foodmate, working capital, balance sheet cash and other GCP. Commitments are due by noon ET Wednesday, May 5. The issuer is also seeking a $570 million-equivalent euro-denominated incremental seven-year first-lien term loan and is upsizing its revolver to $235 million from $160 million. Jefferies is left lead on the second-lien and Credit Suisse is left lead on the euro-denominated first-lien tranche. The additional arrangers on both tranches are Societe Generale, Citi, Keybanc Capital Markets, MUFG, and Antares. Jefferies would be administrative agent. The borrower entity is Engineered Machinery Holdings. Audax Credit BDC holds $494,949 in principal amount of the company’s 1L debt due July 2024 (L+425, 1% floor).

Audax, BDVC, NMFC, PTMN: Idera (B3/B-) — add-on, M&A

Jefferies outlined a 99 OID on the $145 million add-on first-lien term loan for Idera. The incremental debt would be fungible with the borrower’s existing $1.117 billion first-lien term loan due 2028 (L+375, 0.75% floor), which includes 101 soft call protection that rolls off in September. Proceeds, along with those from a $60 million privately placed second-lien term loan, will help fund an acquisition. Commitments are due by noon ET Thursday, April 29. The $1.117 billion extended and upsized first-lien term loan and a $350 million second-lien term loan due 2029 (L+675, 0.75% floor) were syndicated earlier this year via Jefferies to support Partners Group’s acquisition of a majority stake in the business. Existing shareholders HGGC and TA Associates retained a minority stake in the business. The transaction leveraged the issuer at 5.5x first-lien and 7.3x total. Holders of the company’s 1L debt include Audax Credit BDC with $2.6M in principal amount and Business Development Corp. of America with $5.5M. Holders of the 2L debt include Audax Credit BDC with $500,000, New Mountain Finance Corp. with $22.5M and Portman Ridge Finance Corp. with $7.5M.

Audax: Press Ganey (B3/B) — add-on, M&A

A Barclays led arranger group accelerated the commitment deadline on the $180 million add-on term loan for Press Ganey to 5 p.m. ET today. Commitments were originally due by noon ET Wednesday, April 28. The incremental debt is talked at 99-99.5. It would be fungible with the issuer’s $180 million incremental term loan (L+400, 0.75% floor) that was syndicated in October to back M&A. The issuer is offering to reset the 101 soft call protection for six months. Proceeds will fund the $414 million acquisition of a healthcare analytics provider in the issuer’s payer vertical, along with $175 million of new PIK preferred, $50 million of common equity and cash on hand, according to rating agencies. Pro forma leverage runs 5.9x/7.5x off $272 million of marketed adjusted EBITDA. Arrangers on the deal are Barclays, Goldman Sachs, BMO Capital Markets and Deutsche Bank. Barclays is administrative agent. Audax Credit BDC holds roughly $2M of the company’s existing 1L debt due July 2026 (L+350) and $500,000 of the incremental debt due July 2026 (L+400).

Audax: Spartech (B2/B) — LBO

BNP Paribas circulated price talk of L+450-475 with a 0.75% floor and a 99 OID on the $345 million term loan B for Spartech. Proceeds will support the leveraged buyout by Jordan Co. The seven-year term loan will carry 101 soft call protection for six months and is being put in place alongside a $60 million revolver. Commitments are due Monday, May 3. Audax Credit BDC holds $823,333 in principal amount of the company’s 1L debt due October 2025 (L+450).

Download LFI BDC Portfolio News 4-26-21 for BDC investment details provided by Advantage Data; click through links to view stories by LFI.

thomas.dunford@levfininsights.com

212.205.8552

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