LevFin Insights BDC Portfolio News 5/3/21Posted on May 4, 2021
Cabinetworks launches LBO financing; existing debtholders include FSK, FSKR, ICMB
Loan and bond underwriters alike continued their push to wrap business last week, with bonds ducking the typical earnings week sluggishness in a $5.7 billion sprint to the end of the week. A crowded loan market offered investors new opportunities to push back on loose documentation though the potential for an ebbing new-issue calendar may make the loan market’s recent balance short lived.
It’s unsurprising that the buyside managed to extract changes to several deals given the technical backdrop. It was another big week for new-money allocations with Cubic Corp. and Lonza Specialty Ingredients among those breaking for trading. LFI tracked $18.07 billion of loans allocating last week, representing $10.45 billion of net new money, the third week in a row in which the net total has surpassed $10 billion. To put this in context, the weekly average is $7.1 billion in the year-to-date and was $4.88 billion in the fourth quarter of 2020, excluding the final weeks of the year when the market is essentially dormant for the holidays.
All told, arrangers priced, or were poised to price, deals representing $44.36 billion of net new money in April, the highest monthly total since LFI opened its doors in September 2016, surpassing the prior high of $40.44 billion from June 2018. April, of note, is the third-consecutive month of elevated net issuance, with March and February clocking in at $28.3 billion $32.6 billion, respectively.
Portfolios in brief: Holds reflect most recent reporting period available
FSK, FSKR, ICMB: Cabinetworks (ACProducts) (B2/B-) — LBO
A BofA Securities-led arranger group has launched a $1.4 billion seven-year term loan B backing Platinum Equity’s acquisition of Cabinetworks Group from American Industrial Partners, GIC and other equity holders. Price talk is L+375-400, with a 0.50% floor and a 99–99.5 OID, with six months of 101 soft call protection. Commitments are due by noon ET Thursday, May 6. BofA, Citi, Barclays, Deutsche Bank, Goldman Sachs, KKR Capital Markets, BMO Capital Markets, Jefferies and RBC Capital Markets are arranging the loan. The issuer is concurrently marketing a $550 million issue of eight-year (non-call 3) unsecured bond deal, on which BofA is also left lead. An investor call is set for 11 a.m. ET Wednesday, April 28, and roadshows run through Thursday, May 6. Holders of the company’s existing 1L term debt due August 2025 (L+650, 1% floor) include FS KKR Capital Corp. with $41.8M in principal amount, FS KKR Capital Corp. II with $24M and Investcorp Credit Management BDC with $4.9M.
ARCC, Audax, BDVC, Morgan Stanley, PSEC: HelpSystems (B3/B-) — add-on
Golub Capital is offering the $170 million add-on to HelpSystems’ first-lien term loan due 2026 (L+475, 1% floor) at par. The current $1.1305 billion term loan’s 101 soft call protection expires on June 22 and isn’t being reset. The $130 million nonfungible incremental second-lien term loan is talked at L+675 with a 0.75% floor at 99.5, with call protection of 102 and 101 in years one and two, respectively. The loan will be coterminous with the existing $290 million second-lien term loan due 2027 that was placed privately. The commitment deadline is 4 p.m. ET Monday, May 10. Holders of the existing 1L debt include Ares Capital Corp. with $26M, Audax Credit BDC with $496,250, Business Development Corp. of America with $160,000, Morgan Stanley Direct Lending Fund with $19.9M, Prospect Capital with $8.4M and Prospect Flexible Income Fund with $1.5M. Prospect Capital also holds $17.5M in principal amount of the company’s 2L debt due November 2027 (L+800, 1% floor).
Audax: SmartBear Software (B3/B-) — add-on, M&A
Credit Suisse and Antares Capital accelerated the commitment deadline for SmartBear’s $70 million add-on first-lien term loan by two days to 5 p.m. ET tomorrow. There was no change to price talk of 99.5-99.75. The incremental first-lien debt would be fungible with the issuer’s first-lien term loan due March 2028, which is priced at L+425, with a 0.50% floor, and carries 101 soft call protection that runs through Sept. 2, 2021. Proceeds, along with those from a $54 million privately placed second-lien term loan, would fund the acquisition of Bugsnag, an application stability management concern. Audax Credit BDC holds $1M in principal amount of the company’s existing 1L debt.
Oaktree, BDVC, OCSL: Tibco Software (B2/B/B+) — add-on, refinancing
Accounts received allocations of the $110 million add-on first-lien term loan for TIBCO Software (L+375, 0% floor), which was issued at 99. J.P. Morgan arranged the deal, which priced at the midpoint of guidance. Proceeds will be used refinance a $110 million incremental loan that was not broadly syndicated. As reported, Oak Hill in October was left lead on a $110 million nonfungible loan; terms were not disclosed. Proceeds, along with those from a $200 million fungible add-on on which Golub Capital was left lead, helped support the company’s $525 million acquisition of Information Builders. TIBCO is a Vista Equity Partners-controlled software company. Oaktree Strategic Income II holds $9.4M in principal amount of the existing 1L debt. Holders of the company’s 2L debt due March 2028 (L+725) include Business Development Corp. of America with $13M in principal amount, Oaktree Specialty Lending Corp. with $16.7M and Oaktree Strategic Income II with $3.9M. – Thomas Dunford
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