Portfolio mainstays Confie Seguros, McAfee pursue lower margins through respective refinancing, repricing
The brief turn two weeks ago toward caution in the leveraged-loan market amid volatility in high-yield and equities has proved to be but a blip amid a sea of endless liquidity, and that sentiment was affirmed last week as loans ignored another selloff in shares. Indeed for loans, it was business as usual with a pronounced emphasis on opportunistic activity. Bonds, too, got back to business, spurred by Uber’s successful $2 billion private offering, with other issuers jumping into the market in the wake of that upsized transaction.
Launched new issue volume jumped to $23.5 billion last week, from $15.8 billion a week prior. Notably, opportunistic volume surged to $12.5 billion, including $9.4 billion of repricings from 11 issuers. In context, that’s the most repricing activity since the week ended June 8, before the market turbulence spurred by heavy transaction volume ahead of quarter end, when arrangers were highly motivated to de-risk at practically any cost.
Download: LFI BDC Portfolio News 10-22-18
Portfolios in brief: Holds reflect most recent reporting period available
FSIC: AssuredPartners (B3/B) — add-on/refinancing/M&A
Investors received allocations of the $220 million add-on term loan for AssuredPartners (L+325), which broke to a 99.875–100.25 market, versus issuance at 99.75, sources said. Bank of America Merrill Lynch was left lead on the deal, which priced at the tight end of talk. Proceeds would be used to repay revolver borrowings, fund acquisitions and provide the company with additional liquidity, and came alongside an adjoining amendment request. Apax Partners-controlled AssuredPartners is an insurance brokerage that provides property and casualty and employee insurance products to middle-market businesses and personal clients. FS Investment Corp. holds $5.7M of the company’s 7% senior note due August 2025.
GARS: Bass Pro Shops (Ba3/B+) — div recap
J.P. Morgan launched an $800 million add-on term loan for Bass Pro Shops, according to sources. Proceeds, along with those from ABL borrowings and cash on hand, would be used to redeem a portion of the issuer’s preferred equity and fund a shareholder dividend, according to sources. The add-on is offered at 99–99.5. It would be fungible with the existing term loan due September 2024, which is priced at L+500, with a 0.75% floor. Commitments are due by noon ET Thursday, Oct. 25. The issuer is offering to reset the 101 soft call protection for six months, while existing lenders are offered a 25 bps fee to consent to an adjoining amendment request. J.P. Morgan will assume the role of administrative agent, sources noted. Garrison Capital has $5.7M of the existing 1L debt.
Cion, SUNS, Hancock Park, OFS, AINV, CGBD, MRCC: Confie Seguros (B3/B-) — refinancing
Goldman Sachs and Barclays set talk of L+850-875 with a 0% floor and a 98.5 offer price on the $220 million second-lien term loan for Confie Segurosthat will be used, along with $200 million to $230 million of new preferred equity, to refinance the insurance broker’s second-lien term, revolver outstandings, and a portion of its first-lien term loan, sources said. The seven-year second-lien term loan includes 102, 101 call protection and will be governed by an 8.5x secured leverage test. Commitments are due on Oct. 31. The existing $261 million second-lien term (L+950, 1.25% floor) loan matures in 2019. The issuer last year refinanced its first-lien debt via a $665 million first-lien term loan due April 2022 (L+525, 1% floor), but a planned high-yield bond issue that would have taken out the second-lien term loan was dropped from the transaction, sources noted at the time. RBC Capital Markets was left lead on the transaction, which also included Antares, GS, and Barclays as arrangers. Holders of the existing 1L debt include Cion Investment Corp. with $15.8M in principal amount and Solar Senior Capital with $9.8M, and holders of the 2L include Hancock Park Corporate Income with $448,000 in principal amount, OFS Capital with $9.7M, Apollo Investment Corp. with $21.8M, TCG BDC with $9M and Monroe Capital Corp. with $8.6M.
Triton Pacific, Audax, OCSL, OCSI, PFLT: McAfee (B2/B) — repricing
A Morgan Stanley-led arranger group set talk of L/E+375 with a 0% floor and a par offer price on the proposed repricing of McAfee’s cross-border first-lien term debt, sources said. The deal consists of a roughly $2.851 billion tranche and an approximately €650.8 million tranche, according to sources. The issuer would refresh the 101 soft call protection for six months. Commitments and consents are due at 5 p.m. ET Wednesday, Oct. 24. In addition to Morgan Stanley, the arranger group includes J.P. Morgan, Bank of America Merrill Lynch, Goldman Sachs, Barclays, Citi, Deutsche Bank, RBC Capital Markets, UBS and Mizuho. TPG is a co-manager, sources noted. McAfee was last to market in December when it placed a $324 million add-on covenant-lite first-lien term loan due September 2024 (L+450, 1% floor), along with a €150 million add-on (E+425, 0% floor). The incremental loans backed McAfee’s purchase of Skyhigh Networks. The loan's 101 of soft-call protection fell off on Sept. 29. McAfee in September 2017 wrapped a cross-border first- and second-lien dividend recapitalization financing that included a $2.555 billion covenant-lite first-lien term loan (L+450, 1% floor), a €500 million first-lien term loan (E+425, 0% floor) and a $600 million covenant-lite second-lien tranche due 2025 (L+850, 1% floor). Morgan Stanley is administrative agent. Holders of existing 1L debt include Triton Pacific Investment Corp. with $248,000 in principal amount, Audax Credit BDC with $2.5M, Oaktree Specialty Lending Corp. with $7.9M and Oaktree Strategic Income Corp. with $6.9M, while holders of the 2L include Triton Pacific with $500,000, Oaktree Specialty Lending with $8M and PennantPark Floating Rate Capital with $2.5M.
CCT: Ply Gem (B2/B+) — add-on, M&A
A Credit Suisse-led arranger group set price talk of 99.5 on the $665 million add-on term loan backing the proposed merger of Ply Gem and NCI Building, according to sources. The incremental debt would be fungible with Ply Gem’s existing covenant-lite term loan due April 2025, which is priced at L+375, with a 0% floor, and includes 101 soft call protection that runs through April 12, 2019. Commitments are due by 5 p.m. ET Tuesday, Oct. 30. Issuance is technically at Ply Gem Midco. Credit Suisse, J.P. Morgan, RBC Capital Markets, UBS, Barclays, Bank of America Merrill Lynch, Deutsche Bank, Goldman Sachs, Credit Agricole, Jefferies, MUFG, Natixis, Soc Gen and US Bank are arranging the loan. J.P. Morgan is administrative agent. Corporate Capital Trust holds $5.2M of 1L debt.
OCSI: Sandvine Corp. (B3/B-) — div recap
Jefferies, UBS and SocGen set talk of L+450 with a 0% floor and a 99.5 offer price on the first-lien term loan tranche of their dividend recapitalization for Sandvine Corp., sources said. The deal will include a $30 million five-year revolver and a $400 million seven-year first-lien term loan; a $110 million second-lien loan has been placed privately. The first-lien term loan will include six months of 101 soft call protection. Commitments will be due on Oct. 31. Proceeds from last year’s $400 million term loan due 2022 (L+575, 1% floor) and $52 million of equity from Francisco Partners were used to fund acquisition of Sandvine Corp, and its merger with Procera Networks, a portfolio company of Francisco. J.P. Morgan led last year’s financing. The term loan’s soft call protection expired in August. Oaktree Strategic Income Corp. holds $4M of the existing 1L debt. – Thomas Dunford
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