LevFin Insights BDC Portfolio News 4/5/21Posted on April 6, 2021
Savers launches financing for majority acquisition by Ares; FSK holds U.S. and Canadian dollar loans across two vehicles
Loan arrangers rushed to find terms to clear out transactions ahead of the holiday weekend, resulting in a messy Thursday session after a blizzard of commitment deadlines Tuesday and Wednesday yielded fewer pricings than expected. High-yield, meanwhile, remained active with a refinancing-focused slate of 13 transactions coming to market.
Between the crush of opportunistic deals and big recent new-money allocations, the overriding story of last week in loans was the buyside’s increasingly selective stance, resulting in more balanced market conditions. While 11 transactions tightened last week, seven flexed wider and there were more instances of investor-friendly concessions on documentation. Moreover, the week showed off how much more balanced the market became toward the end of March, which overall clocked in at 51 down to 15 up.
The pileup at the end of the week resulted in a crush of breaks Thursday afternoon in an otherwise quiet market, what with several participants making an early exit. Net priced volume clocked in at a healthy $8.21 billion last week, $5 billion of which hit during Thursday’s session when 16 deals were expected to allocate.
Portfolios in brief: Holds reflect most recent reporting period available
FSK: Savers (TBD/TBD) — LBO
KKR Capital Markets, Jefferies and Credit Suisse committed to provide debt financing for the acquisition of Savers by Ares Management, which currently holds a minority stake in the business. A lender call is scheduled for Tuesday, April 6. Savers is the largest for-profit thrift operator in North America. The issuer completed an out-of-court restructuring in 2019, with its $301 million of senior notes exchanged for 7.5% of the company’s equity. The company’s $669 million term loan was repaid in full with proceeds from a $540 million of first- and second-lien term debt, $50 million of subordinated notes, and a portion of a $165 million new equity investment from Crescent Capital, with Crescent and Ares assuming a 92.5% ownership the business. Holders of the company’s U.S. dollar-denominated 1L debt due March 2024 (L+800, 1.5% floor) include FS KKR Capital Corp. with $44.9M in principal amount and FS KKR Capital Corp. II with $54.2M. Holders of the Canadian dollar-denominated debt due March 2024 (C+850, 1.5% floor) include FS KKR Capital Corp. with C$49M and FS KKR Capital Corp. II with C$59.2M.
BXSL: Spencer Spirit (B1/B+) — repricing
A Guggenheim Securities-led group set price talk of L+500, with a 0% floor and a par offer price, on the proposed repricing of Spencer Spirit’s $359 million term loan B. The existing the covenant-lite TLB due June 2026 is currently priced at L+600 with a 0% floor. The issuer is offering to reset the 101 soft call protection for six months. Commitments are due by noon ET Wednesday, April 14. The loan originally totaled $385 million when it was issued in June 2019 to refinance debt. Amortization was 2.5% in the first year, stepping up to 5% for year two and at 3% thereafter. Guggenheim Securities and Wells Fargo are bookrunners on the deal, and are joined by Citizens and TD Securities are co-managers; Wells Fargo will remain administrative agent. Blackstone/GSO Secured Lending Fund holds $45M in principal amount of the company’s 1L debt due June 2026 (L+600).
AINV: Nutrisystem (B2/B) — M&A
A Deutsche Bank-led arranger group circulated guidance of L+525 with a 0.75% floor and a 98-98.5 OID for Nutrisystem’s $557 million first-lien term loan B. Proceeds would be used to fund the acquisition of Adaptive Health. The seven-year covenant-lite term loan would include six months of 101 soft call protection. Deutsche Bank, Nomura, Jefferies, BNP Paribas and Rabobank are arranging the loan. Commitments are due by 5 p.m. ET Tuesday, April 13. The capital structure will also include a $100 million privately placed second-lien term loan. Apollo Investment Corp. holds $8.8M in principal amount of the company’s 1L debt due December 2025 (L+650, 1% floor), $48,000 of its revolver debt and $152,000 of unfunded revolver debt.
TCW: Hunter Fan (B2/B) — dividend recap
Credit Suisse launched a dividend recapitalization financing for Hunter Fan. The issuer is putting in place a $425 million seven-year term loan B and a $33 million five-year revolving credit. Price talk is L+450-475 with a 0.75% floor at 99 with six months of 101 soft call protection. Commitments will be due at 5 p.m. ET Thursday, April 8. TCW Direct Lending VII LLC holds $34.3M in principal amount of the company’s 1L debt due December 2023 (L+663, 1% floor). – Thomas Dunford
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