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LevFin Insights BDC Portfolio News 6/28/21

Posted on June 29, 2021

Amid continued market support, more repricings sought across BDC-held credits

Buoyant conditions prompted loan and bond issuers alike to hunt for aggressive prints last week, with both markets generating a flood of opportunistic deals, while a moderate flow of M&A-related business continued to be met with solid demand.

Last week’s launch stats for loans pretty much tell the story: a surge to 21 launches totaling $21.2 billion as issuers rushed to hit the pre-holiday window. Amid strongly supportive market conditions, $13.3 billion of the week’s $15 billion of opportunistic volume entailed efforts to reduce pricing, either via a straight repricing or a broader refinancing effort.

Portfolios in brief: Holds reflect most recent reporting period available

BCRED: APX Group (B2/B-) — Refinancing

An arranger group including BofA Securities and Credit Suisse is circulating price talk of L+375 with a 0.50% floor and a 99.5 OID on the $1.25 billion term loan B for APX Group. The seven-year covenant-lite loan would include six months of 101 soft call protection. Commitments are due by noon ET Thursday, July 1. Blackstone is a co-manager on the deal. Proceeds from the loan, along with $900 million of unsecured debt, would be used to refinance the issuer’s existing $941 million term loan and redeem three series of bonds: its $667 million of 7.875% senior secured notes due 2022, $225 million of 8.5% senior secured notes due 2024 and $400 million of 7.625% unsecured notes due 2023. The refinancing would extend maturities and reduce pricing. The issuer’s existing term loan is priced at L+500, with a 0% floor and matures in December 2025. Blackstone Private Credit Fund holds roughly $10M in principal amount of the existing term debt.

BCRED, Palmer Square: AssuredPartners (B3/B) — Add-on, repricing

J.P. Morgan launched a repricing of AssuredPartners’ $297 million incremental term loan due February 2027 alongside a $150 million fungible add-on that would be used to fund acquisitions and working capital. The arranger is circulating price talk of L+350-375 with a 0.50% floor and a 99.75 OID. Lenders to the pro forma $447 million tranche are offered six months of 101 soft call protection. Current pricing on the incremental loan is L+450, with a 1% floor. The originally $300 million loan was syndicated in May 2020 to repay revolver borrowings and provide incremental liquidity. It cleared with a non-call-one/par call structure. BofA Securities is administrative agent. Commitments are due by noon ET Wednesday, June 30. Holders of the incremental debt include Blackstone Private Credit Fund with roughly $5M in principal amount and Palmer Square Capital BDC with $990,000. Blackstone Private Credit Fund also holds $5.1M of the company’s 1L debt due February 2027 (L+350, 0% floor).

BCRED: Charter Next Generation (B3/B) — Repricing

Investors received allocations of Charter Next Generations’ repriced $1.836 billion term loan (L+375, 0.75% floor), which was issued at par. Jefferies was left lead on the deal, which priced in line with talk. The deal reprices the issuer’s TLB and incremental term loan from L+425 with a 0.75% floor. CNG, which is backed by Leonard Green & Partners and KKR, is a producer of specialty polyethylene film for primarily food and consumer products, industrial and medical applications. Blackstone Private Credit Fund holds roughly $7M in principal amount of the existing term debt.

Palmer Square Capital BDC: Everi Payments (B1/B+/BB-) — Refinancing

A Jefferies-led arranger group accelerated timing on Everi Payments’ loan by 24 hours, with the commitment deadline now set for 11 a.m. ET Wednesday, June 30. Talk remains at L+275 with a 0.5% floor and a 99.5 offer price on Everi’s $600 million TLB. The seven-year TLB will include six months of 101 soft call protection. Everi will reduce debt by $145 million as part of the refinancing funded by $1 billion of debt and additional cash on hand. The comprehensive refinancing targets the recently repriced $735.4 million TLB, $125 million incremental term as well the roughly $285 million of outstanding 7.5% senior notes due 2025. The issuer plans a $125 million revolver that would be undrawn at close, along with a $600 million seven-year TLB and $400 million of senior notes to facilitate the refinancing. Jefferies, Barclays, Stifel and Truist are arranging the deal. Everi in January repriced its then-$735.5 million term loan B due 2024 to L+275 with a 0.75% floor via a reduction in the prior 1% floor. The current loan is governed by a secured leverage test that was modified by amendment in April 2020 as the issuer put in place a $125 million incremental term loan to bolster liquidity during the pandemic. The incremental term loan due 2024 (L+1,050, 1% floor) is non-callable for two years, followed by six months of 101 hard call protection. Palmer Square Capital BDC holds $1M in principal amount of the term loan B debt and $347,375 of the incremental term debt.

Palmer Square Capital BDC: Harbor Freight Tools (Ba3/BB-) — Repricing

Investors received allocations of the repriced $2.985 billion term loan for Harbor Freight Tools (L+275, 0.50% floor), which was issued at par. Credit Suisse was left lead on the deal, which priced at the tight end of talk. Via the transaction, the issuer is lowering the coupon on its loan from L+300 with a 0.75% floor. Privately held Harbor Freight Tools is a discount tool and equipment retailer based in Calabasas, Calif. Palmer Square Capital $3.5M in principal amount of the term debt.

NexPoint: iHeartCommunications (B2/B) — Repricing

Investors received allocations of iHeartCommunications’ repriced $402 million incremental term loan (L+325, 0.5% floor), which was issued at par. BofA Securities was left lead on the deal, which priced at the tight end of talk and lowers pricing from L+400 with a 0.75% floor. The radio-focused entertainment and media company trades on the Nasdaq under symbol IHRT. NexPoint Capital holds $115,507 in principal of the company’s 6.375% subordinated notes due May 2026 and $214,073 of its 8.375% subordinated notes due May 2027 together with an equity stake valued at $52,081.

BC Partners, FSK: Jo-Ann Stores (TBD/B) — Refinancing

BofA Securities set talk of L+475-500 with a 0.75% floor and a 99-99.5 offer price on Jo-Ann Stores’ $635 million term loan B due 2028. Proceeds refinance the issuer’s term loan due 2023 (L+500, 1% floor). The retailer repaid its $72.7 million second-lien term loan due 2024 earlier this year using cash proceeds from its initial public offering and ABL revolver. Corporate and loan ratings are B2/B. The seven-year TLB would include six months of 101 soft call protection. Proceeds of the new loan would also repay a portion of the issuer’s ABL borrowings. Commitments will be due at noon ET Wednesday, June 30. Holders of the company’s term loan B debt include BC Partners Lending Corp. with $4M in principal amount, FS KKR Capital Corp. with $3.4M and FS KKR Capital Corp. II with $3.6M.

PFX: RBMedia (B3/B-) — Add-on, M&A

Goldman Sachs and KKR Capital Markets accelerated RBmedia’s commitment deadline to 3 p.m. ET tomorrow, June 29, from noon ET Wednesday, June 30. The $150 million fungible add-on term loan due 2025 (L+400, 0% floor) is offered at 99.5-99.75. Proceeds back the Overdrive subsidiary’s acquisition of Kanopy. RBmedia in January repriced and consolidated its facilities as an $890 million term loan due August 2025 (L+400, 0% floor). Proceeds wrapped together a $642 million TLB (L+425, 0% floor) and a $250 million TLB-2 (L+425, 0.5% floor). MCC Senior Loan Strategy JV I LLC holds $5.7M in principal amount of the 1L debt.

Guggenheim, Hancock Park, Nuveen Churchill, OFS: Resource Label Group (Ba2/B+) — LBO

A Credit Suisse-led arranger group set talk of L+425-450 with a 99 OID on the first-lien term loan strip backing Ares Management’s acquisition of Resource Label Group, with second-lien talk set at L+750-775 at 98.5. The loans include a 0.75% floor. The financing includes a $495 million seven-year first-lien term loan strip split between a $405 million funded tranche and a $90 million delayed-draw term loan. The $125 million eight-year second-lien strip includes a $110 million tranche and a $15 million DDTL. Ticking fees are 50% of the margin for days 46-90, rising to the full margin on day 91. The first-lien strip includes six months of 101 soft call protection, and the second-lien carries 102, 101 hard call premiums in years one and two, respectively. The issuer is also putting in place a $60 million revolver. The company’s existing debt includes a 1L term loan (L+450), an incremental 1L loan (P+500) and a DDTL (L+500), all due May 2023, and a 2L term loan due November 2023 (L+850). Holders of the existing debt include Nuveen Churchill Direct Lending Corp., Guggenheim Credit Income Fund, Hancock Park Corporate Income, OFS Capital Corp. and FS KKR Capital Corp.

BXSL, BCRED, PSEC: Shutterfly (B2/B-) — Incremental, M&A, repricing

Barclays set talk of L+500 with a 0.75% floor and a 99.5 offer price on Shutterfly’s $1.023 billion term loan B due Sept. 25, 2026. S&P flagged a $150 million incremental term loan to back the $225 million acquisition of Spoonflower, while the deal has since been expanded to include a repricing of the $873.2 million of outstanding term debt due 2026. Current pricing is L+600 with a 0% floor. Shutterfly is offering 12 months of 101 soft call protection. Commitments will be due at 5 p.m. ET Wednesday, June 30. Financing for the acquisition also includes $64 million of seller notes. Holders of the existing 1L debt include Blackstone Secured Lending Fund with $26.5M include, Blackstone Private Credit Fund with $5M, Prospect Capital Corp. with $16M and Prospect Flexible Income Fund with $1.6M. Blackstone Private Credit Fund also holds $49.6M of 1L term debt due September 2026 (L+650, 1% floor) and $13.2M of 8.5% 1L notes due October 2026. Blackstone Secured Lending Fund also holds $13.6M of the L+650 term debt.

BDVC: Skillsoft (B2/B-) — Refinancing

A Citi-led arranger group launched a $480 million seven-year term loan B for Skillsoft to refinance existing term debt and ABL borrowings. Price talk is L+375 with a 0.75% floor at 99.5. Commitments are due at 5 p.m. ET Wednesday, June 30. Arrangers are Citi, BofA Securities and J.P. Morgan. The company earlier this month announced the completion of its merger with special purpose acquisition company Churchill Capital Corp II and acquisition of Global Knowledge for a total combined purchase price of $1.5 billion. The corporate digital learning company trades on the NYSE under the symbol SKIL. Business Development Corp. of America holds $12.9M in principal amount of the company’s 1L debt due April 2025 (L+750, 1% floor) a combined $1.4 million of 1L debt due December 2024 (L+750, 1% floor) and an equity stake valued at $7.2M.

Steele Creek, Palmer Square, BCRED: Univision Communications (B2/B) — Repricing

Goldman Sachs offered additional details on the proposed repricing of Univision Communications’ $1.964 billion term loan B due March 2026, noting the repriced deal would include a 50 bps margin step-up if the merger with Grupo Televisa’s content and media assets doesn’t close. The arranger is circulating price talk of L+325, with a 0.75% floor and a 99-99.5 OID. The issuer would reset the 101 soft call protection for six months. Current pricing is L+375 with a 1% floor. Commitments are due at noon ET Tuesday, June 29. As proposed, the transaction would bring the coupon of the 2026 loan in line with that of the $1.05 billion, seven-year term loan that was syndicated in May to back the company’s planned $4.8 billion acquisition of Grupo Televisa’s content and media assets, which would lever the Spanish-language media company at 5.1x, all senior. Holders of the 1L debt include Steele Creek Capital Corp. with $491,000 in principal amount, Palmer Square Capital BDC with $4.1M and Blackstone Private Credit Fund with $12.8M. – Thomas Dunford

Download LFI BDC Portfolio News 6-28-21 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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