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LevFin Insights BDC Portfolio News 6/1/21

Posted on June 2, 2021

Repricings and refinancings continue to proliferate in issuer-friendly market

The leveraged loan market focused largely on cleaning up deals ahead of the holiday weekend, although arrangers continued to roll out opportunistic business to take advantage of the near-term air pocket in M&A-related deal flow. And while Conduent’s postponement highlighted investors unease over individual credits, the broad market story offered an issuer-friendly roadmap of accelerated timing and tightening pricing with 10 issuers flexing lower and none officially moving higher.

Unsurprisingly, a substantial portion of this week’s $5.8 billion of gross launched volume—$2.5 billion—stems from opportunistic activity that in many cases could be accomplished on an intraweek basis ahead of the holiday. A big late-week LBO launch boosted both overall net and M&A-related volume but was more reflective of post-holiday business. Nevertheless, net launched volume of $3.8 billion won’t do much to improve technicals in the near term.

Portfolios in brief: Holds reflect most recent reporting period available

Audax, ARCC, BCSF, CGBD: Aimbridge Hospitality (B3/CCC+) — repricing

J.P. Morgan launched a repricing of Aimbridge Hospitality’s $199 million nonfungible incremental term loan. Price talk is L+475-500 with a 0.75% floor at par, with six months of 101 soft call protection. By contrast, the term loan due February 2026 is current priced at 600 with a 0.75% floor. The loan, placed in September to fund GCP, included six months of 101 soft call protection that has since lapsed. Commitments are at noon ET Wednesday, June 2. Audax Credit BDC Holds $2.9M in principal amount of the company’s 1L debt due February 2026 (L+375, 0% floor). Holders of the company’s 2L debt due February 2027 (L+750, 0% floor) include Ares Capital Corp. with $22.5M, Bain Capital Specialty Finance with $20.2M, TCG BDC with $9.2M and TCG BDC II with $21M.

BCRED, Steele Creek: Baldwin Risk Partners (B2/B) — M&A

Investors this afternoon received allocations of the $500 million term loan B for Baldwin Risk Partners (L+350, 0.50% floor), which was issued at 99.75. J.P. Morgan was left lead on the deal, which priced tight to original talk. The transaction entails both a repricing of the borrower’s existing $400 million term loan (L+400, 0.75% floor) and a $100 million add-on for general corporate purposes. Baldwin Risk Partners (NASDAQ:BRP) is an insurance distribution platform offering commercial and personal insurance products. Holders of the company’s existing 1L debt include Blackstone Private Credit Fund with $5M in principal amount and Steele Creek Capital Corp. with $995,000.

CCAP, BC, PTMN: Colibri (TBD/TBD) — refinancing

RBC Capital Markets and Jefferies launched a $400 million seven-year term loan B for Colibri, setting a lender call for 11 a.m. ET Thursday, June 3. Proceeds would be used to refinance the issuer’s existing privately placed debt. Alongside the TLB, the issuer is also putting in place a $30 million revolver. Gridiron Capital-controlled Colibri is a provider of career life-cycle management for mandatory professional education solutions across four core end marketing including real estate, healthcare, financial services and valuation and property services. The company delivers primarily online content through a portfolio of brands such as RealEstateExpress, Elite Learning, Securities Training Corp. and McKissock. Crescent Capital BDC lists $8.1M in principal amount of the company’s unitranche term debt due May 2025 (L+575, 1% floor) and $1.3M of unitranche delayed draw term debt due May 2025. BC Partners Lending Corp. lists $172,166 of the company’s senior secured debt due May 2025 (L+804) together with $233,246 of second amendment term debt due May 2026 and $1.5M of delayed-draw debt due May 2026. Portman Ridge Finance Corp. lists $6M of last-out term debt due May 2025 (L+805, 1% floor) due May 2025 together with $690,407 of last-out second amendment term debt due May 2025 and $932,983 of delayed-draw term debt due May 2025.

ARCC, BC, Palmer Square, BCRED, Morgan Stanley NMF SLF I, PSEC: HelpSystems (B3/B-) — repricing

Accounts received allocations of the roughly $1.365 billion repriced first-lien term loan for HelpSystems (L+400, 0% floor), which was issued at par. Jefferies was left lead on the deal, which priced at the wide end of talk. Via the transaction, the issuer is lowering the coupon from L+475 with a 1% floor and making some revisions to documentation. HelpSystems is a provider of IT operations and management monitoring. The company is backed by Harvest Partners, TA Associates, HGGC and Charlesbank Capital Partners. Holders of the existing 1L debt due November 2026 include Ares Capital with $25.9M, BC Partners Lending Corp. with $3M, Palmer Square Capital BDC with $5M, Blackstone Private Credit Fund with $10.9M, Morgan Stanley Direct Lending Fund with $19.8M, NMF SLF I with $4.1M, Prospect Capital Corp. with $8.4M and Prospect Flexible Income Fund with $1.5M. Prospect Capital Corp. also holds $17.5M of the company’s 2L debt due November 2027 (L+800, 1% floor).

ARCC, Audax, CGBD: Sovos Brands (B3/B) — refinancing, dividend

A Credit Suisse-led arranger group accelerated the commitment deadline for Sovos Brands’ $580 million first-lien term loan to 5 p.m. ET Wednesday, June 2, from June 4 previously. There was no change to price talk of L+475 with a 0.75% floor and 99-99.5 OID. Proceeds, along with those from a $200 million privately placed second-lien term loan, would be used to refinance existing debt and fund a shareholder dividend. The transaction, which includes a $413 million dividend, would leverage the issuer at 4.5x/6.1x. The seven-year covenant-lite loan would include six months of 101 soft call protection. The issuer last tapped the market in October for a $100 million add-on term loan to back its acquisition of Birch Benders, which priced at 99.75 and levered the issuer at 3.8x, all senior. The add-on was fungible with the existing first-lien term loan due November 2025, increasing it to about $380 million. The existing loan is priced at L+475, with a 0% floor, with a step to L+500 at 4.3x net first-lien leverage. Holders of the company’s existing 1L debt include Ares Capital Corp. with $6.7M, Audax Credit BDC with $2.5M, TCG BDC with $12.3M and TCG BDC II with $19.6M.

Audax: System One Holdings (B2/B-) — add-on, M&A

Truist Securities tightened the offer price to par from 99.75 on System One Holdings’ $30 million fungible incremental term loan B that funds an acquisition. The deadline has been accelerated to 5 p.m. ET today from Thursday, June 3. In January, System One Holdings placed its $290 million term loan B due 2028 (L+450, 0.75% LIBOR floor) to finance the buyout of the company by Oaktree Capital Management. System One, based in Pittsburgh, is a provider of diversified outsourced technical solutions and services within the engineering, government/IT, clinical, digital & creative, and legal markets. Audax Credit BDC holds $500,000 in principal amount of the company’s senior secured term debt.

OFS: Xperi (Ba3, BB-) — refinancing

A BofA Securities-led arranger group this afternoon set price talk of L+300-325 with a 0% floor and a 99.5-99.75 OID on the $810 million term loan B for Xperi. The seven-year loan would include six months of 101 soft call protection. Proceeds, along with cash on hand, will be used to refinance the existing term loan B. The refinancing would reduce pricing and extend maturities. The existing loan matures in 2025 and is priced at L+400, with a 0% floor; the 101 soft call protection rolls off next week. As of March 31, there was about $860.6 million outstanding under the company’s TLB, SEC filings show. BofA, RBC Capital Markets, Barclays and Wells Fargo are arranging the loan. Commitments are due by 5 p.m. ET Thursday, June 3. OFS Capital holds $426,000 in principal amount of the existing 1L debt.

Download LFI BDC Portfolio News 6-1-21 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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