LevFin Insights BDC Portfolio News 2-11-19

Posted by Thomas Dunford on Feb 11, 2019 10:45:57 AM
Thomas Dunford
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Genstar-backed companies drive M&A activity in positions held by AINV, PFLT, SUNS, Audax, TCPC and GSBD

The new-issue loan market turned a corner last week with a procession of closely watched, larger transactions wrapping—due in part to a resurgent high-yield market—leaving investors with little else to chew on. The sudden prospect of a slowing calendar flipped a switch, and accounts flooded into transactions they had previously been viewing with a cautious eye. The frenzy generated seven reverse flexes, including some that were being discussed wide of official guidance just a few days earlier. Indeed no loan deals widened as the market heated up.

Download: LFI BDC Portfolio News 2-11-19

Despite the week’s changes, average all-in rated spreads remained in their recent context, with BBs holding at L+308 and single Bs at L+485. Stripping out add-on deals, single B all-in average spreads sit at L+499, a steady upward move over the last couple of weeks. Of course, the business cleared out last week included a heavy helping of B3 rated risk that was already entering the market at a premium to the averages.

Portfolios in brief: Holds reflect most recent reporting period available

AINV, PFLT, SUNS: Alera Group (B3/B) — M&A

J.P. Morgan launched $105 million of incremental term debt for Alera Group that will be used, along with privately placed second-lien debt, to fund acquisitions under a letter of intent. The first-lien includes a $75 million fungible add-on to Alera's $550 million covenant-lite first-lien term loan B due 2025 (L+450, 0% floor), for which J.P. Morgan is the administrative agent. The add-on is offered at 99. Note the deal also includes a $30 million delayed-draw first-lien term loan that has been privately placed, sources said. Commitments are due by Feb. 14. Alera is controlled by Genstar Capital. Holders of the existing 1L debt include PennantPark Floating Rate Capital with $10M and Solar Senior Capital with $3M, while Apollo Investment Corp. holds $20M in unfunded delayed-draw 1L debt.

BBDC, TCRD: Duff & Phelps (B3/B) — M&A

UBS today set price talk of L+400-425, with a 98.5 OID, on the $280 million incremental term loan backing Duff & Phelps’s planned acquisition of Prime Clerk. Lenders are offered six months of 101 soft call protection. Commitments are due by Tuesday, Feb. 19. The incremental debt will be coterminous, but not fungible, with the borrower’s existing covenant-lite term loan due February 2025 (L+325), whose 50 bps of MFN protection lapses Feb. 13 per the deal’s 12-month sunset provision. Pro forma net leverage runs 5.5x, all senior. The transaction is also being financed with $68 million of rollover equity and $50 million of new sponsor equity. Barings BDC holds $13.4M of the existing 1L debt, and THL Credit holds an equity stake valued at $11.2M.

Audax, TCPC, GSBD: Institutional Shareholder Services (NR) — M&A

Antares Capital and Golub Capital launched a $735 million first- and second-lien financing backing Institutional Shareholder Services’ acquisition of Strategic Insights, setting a lender meeting on Tuesday, Feb. 12. Both issuers are Genstar Capital portfolio companies. The financing, which won’t be rated, includes a $40 million revolver, a $495 million first-lien term loan and a $200 million second-lien term loan. Audax Credit BDC holds $2.5M of the company’s existing 1L debt (L+375) due October 2024, while holders of the existing 2L debt (L+775) due October 2025 include Goldman Sachs BDC with $5.1M, Goldman Sachs Middle Market Lending Corp. with $7.2M and Goldman Sachs Private Middle Market Credit Corp. with $7.7M.

Download LFI BDC Portfolio News 2-11-19 for BDC investment details provided by Advantage Data; click through links to view stories by LFI.



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