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LevFin Insights BDC Portfolio News 8/9/21

Posted on August 11, 2021

Heavy slate of M&A activity brings forth several incremental deals with BDCs holding existing credits

An extraordinarily busy loan market heading into the August hiatus—40 transactions remained in market as last week came to an end—is giving investors leverage to negotiate on terms and pricing even as many deals continue to proceed through the market without incident. Bond issuance blossomed, as well, to 16 credits and 18 tranches for $14.78 billion, the most in 16 weeks and fifth-largest one-week issuance amid this year’s record pace.

Gross launched loan volume increased last week to $15.8 billion from $13.8 billion the previous week, with 31 more transactions launched into the waning August market, essentially double 16 the previous week. On a net basis, volume was less impressive, at $5.9 billion last week versus $6.7 billion the previous week. Again, activity was close to evenly split between M&A and opportunistic business.

However, a crowded market has yielded palpable changes in recent days, as the previous week’s issuer-friendly flex ratio of 8:2 flipped to an 8:3 advantage favoring investors. That’s helped nudge average pricing levels wide of the previous week’s end of July reading: Average all-in pricing for all deals moved to L+457 from L+442 the previous week; for all single Bs, pricing moved to L+488 from L+473, and stripping out add-on business the single B reading increased to L+491 from L+482.

BCRED, Audax: Berlin Packaging (B3/B-) — Refinancing

A Goldman Sachs-led arranger group circulated price talk of L+350-375 with a 0.50% floor and a 99 OID on the $1.07 billion first-lien term loan for Berlin Packaging. The issuer is proposing portability language as part of the refinancing, though specifics were not available at publication time. The loan would mature in March 2028 and include six months of 101 soft call protection. Proceeds will be used to refinance the issuer’s first-lien term loans maturing in 2025 and its privately placed second-lien term loan, as well as place cash on the balance sheet. Goldman Sachs, Barclays, Jefferies and MUFG are arranging the deal. Holders of the company’s 1L debt due November 2025 (L+300, 0% floor) include Blackstone Private Credit Fund with $12.6M in principal amount and Audax Credit BDC with $494K. Blackstone Private Credit Fund also holds $5M in principal amount of the company’s 1L debt due March 2028 (+325, 0.5% floor).

PTMN: Janus International Group (B2/B) — M&A

UBS set an OID of 99.27 on the $175 million add-on first-lien term loan backing Janus International Group‘s acquisition of DBCI. The incremental debt would be fungible with the borrower’s existing term loan due February 2025, which is priced at L+325 with a 1% floor, and includes a step to L+300 at B1/B+ corporate ratings. Commitments are due by noon ET Thursday, Aug. 12. Portman Ridge Finance Corp. holds $2.2M in principal amount of the existing 1L debt.

PTMN, Audax, Palmer Square, GBDC: Radiology Partners (B3/B-) — M&A

A Barclays-led arranger group launched a $300 million incremental first-lien term loan for Radiology Partners. The loan will be coterminous with the issuer’s term loan due July 2025. Proceeds will finance a trio of acquisitions under letters of intent with an aggregate purchase price of roughly $362 million that are expected to close in August. Commitments are due at noon on Thursday, Aug. 12. The issuer last approached the loan market in 2020 with a repricing of its then-$1.34 billion term loan to L+425 with a 0% floor. Holders of the 1L term debt include Portman Ridge Finance Corp. with $7M in principal amount, Audax Credit BDC with $4.2M and Palmer Square Capital BDC with $3.5M. Golub Capital holds equity stakes valued at a combined $313K.

BCRED, Kayne Anderson, Palmer Square, BDVC, Franklin BSP, NMFC: RealPage (B3/B-/B) — M&A

Goldman Sachs set price talk of 98.5-99 on the $290 million add-on first-lien term loan for RealPage. The add-on would be fungible with the $2.75 billion first-lien term loan due April 2028 (L+325, 0.5% floor), which is covered by a 101 soft call premium that rolls off in October. Proceeds from the incremental debt back the company’s acquisition of G5 Search Marketing. Commitments are due Wednesday, Aug. 11. Holders of the company’s existing 1L debt include Blackstone Private Credit Fund with $6.9M in principal amount; Kayne Anderson BDC with $962K; Palmer Square Capital BDC with $5M; and NMFC Senior Loan Program III LLC, a joint venture between New Mountain Finance Corp. and SkyKnight Income II LLC, with $14M. Holders of the company’s 2L debt due 2029 (L+650, 0.75% floor) include Business Development Corp. of America with $13.6M in principal amount, Franklin BSP Capital with $5.4M, New Mountain Finance Corp. with $25M, New Mountain Guardian III BDC with $19.3M and NMF SLF I with $14.3M.

Audax: System One Holdings (B2/B-) — Repricing

Truist Securities launched a repricing of System One Holdings’ $320 million term loan B. Price talk is L+375-400, with no change to the current 0.75% floor and a 99.75 OID. Commitments are due at noon ET Thursday, Aug. 12. Existing pricing on the covenant-lite TLB due March 2028 is L+450 with a 0.75% floor that was initially placed in January to finance the buyout of the company by Oaktree Capital Management. System One was last in market in June when it raised a fungible $30 million add-on term loan to fund an acquisition. Audax Credit BDC holds $500K in principal amount of the existing TLB debt.

CCAP: Teaching Strategies (B3/TBD) — LBO

An arranger group led by Deutsche Bank and KKR Capital Markets set talk of L+375-400 with a 0.5% floor and a 99.5 offer price on the first-lien term loan tranche of the financing backing KKR’s purchase of Teaching Strategies from Summit Partners. Second-lien talk is L+650-675 with a 0.5% floor at 99. Deutsche Bank is left lead on a $320 million seven-year first-lien term loan B, while KKR is left lead on a $115 million eight-year second-lien term loan. The covenant-lite first-lien term loan would carry six months of 101 soft call protection, and the second-lien term loan would be callable at 102 and 101 in years one and two, respectively. Commitments are due at 5 p.m. ET Tuesday, Aug. 17. Crescent Capital BDC holds $9.1M in principal amount of the company’s existing unitranche debt due May 2024 (L+600, 1% floor).

SIRR, BKCC, TCPC: TEAM Services Group (B3/B-) — M&A, refinancing

Investors received allocations of the $34 million add-on term loan for TEAM Services (L+500, 1% floor), which broke to a 98.25-98.75 market from issuance at 98. Credit Suisse was left lead on the deal, which priced in line with talk with a $4 million upsize. Proceeds support an acquisition and refinance the existing revolving credit facility. Alpine Investors-backed TEAM is a facilitator of supports for the elderly and people with disabilities. Sierra Income Corp. holds $5M in principal amount of the company’s 1L debt due December 2027 (L+500, 1% floor). Holders of the company’s 2L debt due November 2028 (L+900, 1% floor) include BlackRock Capital Investment Corp. with $5.8M, Blackrock TCP Capital Corp. with $25M and Sierra Income Corp. with $5M.

BCRED, NMFC: Unified Women’s Healthcare (B3/B-) — M&A

A Barclays-led arranger group set a 99-99.5 offer price on the $130 million fungible add-on term loan for Unified Women’s Healthcare backing its acquisition of Women’s Health USA. The loan will be fungible with the issuer’s first-lien term loan due December 2027 (L+425, 0.75% floor). Arrangers are Barclays, Credit Suisse, RBC Capital Markets and Antares Capital. Commitments will be due at 5 p.m. ET Wednesday, Aug. 11. Holders of the existing 1L debt include Blackstone Private Credit Fund with $3.1M in principal amount and NMFC Senior Loan Program III LLC with $10M.

Audax, BCRED, NMFC: Waystar (B3/B-/B-) — M&A

J.P. Morgan, Deutsche Bank and Barclays tightened the offer price on Waystar Technologies’ add-on term loan to 99.25 from a range of 98.78-99. The issuer is seeking a $247 million add-on to its $1.5 billion first-lien term loan due 2026 (L+400, 0% floor) to fund its Patientco acquisition. Holders of the existing 1L debt include Audax Credit BDC with $3M in principal amount, Blackstone Private Credit Fund with $8M and NMFC Senior Loan Program III LLC with $4.1M. – Thomas Dunford

Download LFI BDC Portfolio News 8-9-21 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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