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LevFin Insights BDC Portfolio News 8/2/21

Posted on August 2, 2021

Incremental debt planned at Colibri, Duravant, Vistage; existing debtholders include BC Partners, PTMN, CCAP, Audax

While the pace of new loan launches appears to be abating as the market nears its late-summer lull, arrangers have been wrapping a huge amount of business, with many issuers winning advantageous terms allowing underwriters to derisk underwritten business and emboldening issuers to press ahead on opportunistic business. Likewise, high-yield cranked up volume last week with more than $10 billion of supply and back on pace to record issuance in the first half. Deals covered a variety of ratings and purposes and were generally oversubscribed.

The secondary loan market had a mildly softer tone last week as accounts lightened up on some current holdings to make room for new paper. The average bid price of the Credit Suisse Leveraged Loan Index ended the day Thursday at 97.71% of par, down 15 bps from 97.86 at the previous Friday’s close, which is roughly on par with the previous week’s 13 bps decline. The recent mild losses, however, have pushed the month-to-date return to 0.01%, setting the market up for its worst monthly performance since March 2020, when the Index returned negative 12.46% as the market reeled as Covid-19 spread.

Portfolios in brief: Holds reflect most recent reporting period available

Steele Creek: Avolon (Baa3/BBB-/BBB-) — Repricing

Investors received allocations of Avolon’s $672 million repriced term loan B-5 (L+225, 0.50% floor), which was issued at par. Deutsche Bank was left lead on the deal, which priced in line with talk. Via the transaction, aircraft lessor is lowering the coupon on the loan from L+250 with a 0.75% floor. Steele Creek Capital Corp. holds $998K in principal amount of the existing 1L debt due December 2027.

BC Partners, PTMN, CCAP: Colibri (B3/B-) — Add-on, M&A

RBC Capital Markets set a 98.5 offer price on the $55 million add-on term loan for Colibri. The loan is expected be fungible with the borrower’s recently syndicated $350 million term loan due June 2028, which is priced at L+500 with a 0.75% floor; the 101 soft call protection rolls off in December. Pro forma for the new debt, the term loan would grow to $405 million. Proceeds will be used to fund an acquisition in the education space. Commitments are due at noon ET Wednesday, Aug. 4. Proceeds from the original $350 million loan were used to refinance debt and fund a $69 million dividend, leveraging the issuer at 4.5x, all senior, LFI previously reported. BC Partners holds $172K of the company’s senior secured debt due May 2025, $233K of the second amendment term debt due May 2026 and $1.5M of the company’s delayed-draw debt due May 2026, all listed at L+804. Portman Ridge Capital Corp. holds $6M of the company’s last-out term debt, $933K of the last-out delayed-draw term debt and $690K of the last-out second amendment term debt, all due May 2025 and listed at L+805 with a 1% floor. Crescent Capital BDC holds $8.1M of the company’s unitranche 1L term debt and $1.3M of the unitranche 1L delayed-draw term debt, both due May 2025 and listed at L+575 with a 1% floor.

Audax: Duravant (B3/B-) — Incremental, refinancing, dividend

A Jefferies-led arranger group set price talk of L+375 with a 0.75% floor and a 99.5 OID on the $1.135 billion incremental first-lien term loan for Duravant. In addition, the loan would include three 25 bps step-downs: two leverage-based step-downs set at first-lien net leverage of 4.75x and 4.25x as well as a third step-down tied to an IPO. The first-lien loan would mature on May 21, 2028, and carry six months of 101 soft call protection. Meanwhile, the $375 million add-on to the second-lien term loan is offered at par. It would be fungible with the existing second-lien loan due May 21, 2029 (L+650, 0.75% floor), which is callable at 102 until May 2022 and at 101 in the following year. Proceeds would refinance near-term maturities and support a shareholder distribution. The issuer is proposing to add portability language to the capital structure in connection with the transaction. The portability would be available for two years and would be subject to pro forma secured leverage of 7x, a minimum of $1 billion of sponsor AUM and a minimum 30% equity requirement. The borrower’s recently syndicated loans would be amended to add the portability language. Commitments are due by 2 p.m. ET Thursday, Aug. 5. Audax Credit BDC holds $494K of the company’s 1L debt due July 2024 (L+425, 1% floor).

CION, Kayne Anderson, PSEC, TCW VII: GEON Performance Solutions (B2/B) — Dividend

Sponsor SK Capital is seeking a $160 million dividend from GEON Performance Solutions as part of the issuer’s $600 million term loan B that hit the market last week. The issuer also will utilize $60 million of cash on hand for the deal, which repays $477 million of debt, according to Moody’s. Leverage is 4.1x net of $11 million of balance sheet cash at closing. HSBC, Morgan Stanley and KeyBank outlined talk at L+500 with a 0.75% floor and a 99 OID. The seven-year term loan would carry 12 months of 101 soft call protection. Commitments are due at 5 p.m. ET Tuesday, Aug. 10. HSBC will be administrative agent. The financing would also include a $60 million five-year cash flow revolving credit. Holders of the company’s existing 1L debt due October 2024 (L+625, 1.625% floor) include CION Investment Corp. with $22.1M, Kayne Anderson BDC with $4.4M, Prospect Capital Corp. with $31M and TCW Direct Lending VII with $20.1M.

CCAP, Audax: Vistage Worldwide (B2/B) — Add-on, repayment

Sole arranger Macquarie launched a $90 million fungible add-on term loan for Vistage International. A lender call is scheduled for noon ET Tuesday, Aug. 3. The loan would be fungible with Vistage’s $317 million term loan due February 2025. Use of proceeds is to repay revolver outstandings and fund a shareholder distribution. Current pricing is L+400 with a 1% floor. The issuer plans to refresh 101 soft call protection for six months. Providence Equity-backed Vistage is a member-based advisory company for executives of small and midsize businesses with members across 20 countries. Holders of the existing 1L debt include Crescent Capital BDC with $6.1M in principal amount and Audax Credit BDC with $2.3M. – Thomas Dunford

Download LFI BDC Portfolio News 8-2-21 for BDC investment details provided by Advantage Data; click through links to view stories by LFI. ‒ Thomas Dunford

thomas.dunford@levfininsights.com

212.205.8552

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