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Leveraged loans end Sept with 1.08% return. YTD return: 8.09%

Loans lost 0.01% today after losing 0.03% yesterday, according to the LCD Daily Loan Index.

The S&P/LSTA US Leveraged Loan 100, which tracks the 100 largest loans in the broader Index, lost 0.07% today.

In the year to date, loans overall have gained 8.09%.

A full xls of the Daily Index is attached.

LCD Daily Loan Index – September 28, 2012

TOTAL RETURNS

All

Perf. Loans

L100

BB

B

CCC

For 9/28/12

-0.01%

     -0.01%

 -0.07%

0.01%

0.01%

   -0.10%

For 9/27/12

-0.03%

     -0.02%

 -0.09%

0.01%

-0.01%

   -0.22%

 

 

 

 

 

 

 

Month-To-Date 9/28/12

1.08%

     1.14%

 1.17%

0.70%

1.39%

2.71%

12/31/11 – 9/28/12

8.09%

     8.24%

9.17%

5.64%

9.31%

15.59%

12/31/10 – 9/28/11

   -1.05%

   -1.05%

   -2.44%

   -0.26%

   -0.91%

   -5.40%

Source: S&P/LSTA Leveraged Loan Index.

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Garda World Security readies $350M loan backing LBO by Apax

RBC Capital Markets, Bank of America Merrill Lynch, TD Securities and Mizuho have set a bank meeting on Wednesday Oct. 3 to launch their $350 million secured financing backing the C$1.1 billion purchase of Garda World Security by founder Stephan Cretier and Apax Partners.

The transaction includes a $100 million, five-year revolving credit and a $250 million, seven-year B term loan, sources said.

Under the terms of the transaction, the consortium will acquire each Class A share of Garda for C$12 in cash, which represents a 30% premium over the closing price of the Class A shares on Sept. 6, 2012, and a 45% premium to the 90-day volume-weighted average price of Garda Class A shares on the Toronto Stock Exchange for the period ended Sept. 6, 2012, the last trading date prior to the announcement. The completion of the transaction is subject to court approval and shareholder approval.

Garda is a global provider of security solutions, cash logistics, and global risk consulting services with headquarters in Montreal, Canada. – Chris Donnelly

 

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Realogy sets terms of IPO, seeks to cut debt by nearly $2.8B

Realogy today outlined the terms of its proposed initial public offering, through which the company plans to reduce its debt load by about $2.77 billion.

The Apollo Management-controlled provider of real estate and relocation services is seeking to sell 40 million shares in a range of $23-27 per share.

Assuming the midpoint of the price range, the company expects to receive net proceeds of $946 million, or $1.089 billion if the underwriters exercise in full their option to purchase an additional six million shares, the company said in an SEC filing.

The company plans to use a portion of the net proceeds to fully repay its $650 million second-lien term loan, which pays 13.5%, and repurchase the $64 million outstanding under its 10.5% senior notes due 2014 and the $41 million outstanding under of its PIK toggle notes due 2014, according to the filing.

Apollo and Paulson & Co., which together hold about $1.9 billion of the $2.11 billion of the issuer’s 11% convertible notes due 2018, have agreed to convert their convertible notes into class A common stock upon completion of an IPO, SEC filings show. The company would also apply a portion of the proceeds to redeem the $207 million of convertible notes that are not held by Apollo or Paulson at 90% of their face value.

Pro forma for the transaction, the company’s long-term debt would be reduced to $4.56 billion, from $7.34 billion as of June 30, according to the filing.

The company’s first-lien TLB due 2016 (L+425) is unchanged on the news today, wrapped around 99, though it traded higher back in June when the company disclosed its IPO plans.

Goldman Sachs, J.P. Morgan, Barclays, and Credit Suisse are joint bookrunners on the offering. The company plans to list its shares on the New York Stock Exchange under the ticker symbol “RLGY”.

Realogy is currently rated CCC/Caa2. At the time the company initially filed with the SEC for the IPO in June, Standard & Poor’s said the issuer’s ratings were not currently affected by the filing, but said that if the IPO were to occur, it could result in a financial profile supportive of a corporate rating in the B rating category. Apollo acquired Realogy in 2007. – Kerry Kantin

Most Recent Comps (LCD News subscribers)

Grubb & Ellis (DIP 3/12) 4.80M Deal Dossier
Realogy (HY 1/12) 918.00M Deal Dossier
CB Richard Ellis (Add-on 11/11) 300.00M Deal Dossier
Kennedy-Wilson (Add-on HY 4/11) 50.00M Deal Dossier
Kennedy Wilson (HY 3/11) 200.00M Deal Dossier
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RockTenn extends maturity of $2.7B of pro rata loans

RockTenn disclosed that it has extended the maturity of its $1.22 billion A term loan and $1.475 billion revolver by a year, to 2017, via an amendment, according to a company statement.

On Sept. 4, RockTenn completed a two-part $700 million offering of senior notes through bookrunners Bank of America Merrill Lynch, J.P. Morgan, SunTrust Robinson Humphrey, and Wells Fargo. Proceeds will be used to repay a portion of the borrowings outstanding under the company’s revolver and to repay some of the A term loan and A-2 term loan RockTenn obtained last year.

Norcross, Ga.-based Rock-Tenn manufactures paperboard, containerboard, and consumer and corrugated packaging. Corporate ratings are BBB-/Ba1. – Richard Kellerhals

Follow Richard on Twitter @KellerhalsLCD for Investment-Grade and Pro Rata news

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Leveraged loan returns slip 0.03% today; YTD return is 8.10%

Loans lost 0.03 today after being unchanged yesterday, according to the LCD Daily Loan Index.

The S&P/LSTA US Leveraged Loan 100, which tracks the 100 largest loans in the broader Index, lost 0.09% today.

In the year to date, loans overall have gained 8.10%.

A full xls of the Daily Index is attached (LCD News subscribers only).

LCD Daily Loan Index – September 27, 2012

TOTAL RETURNS

All

Perf. Loans

L100

BB

B

CCC

For 9/27/12

-0.03%

     -0.02%

 -0.09%

0.01%

-0.01%

   -0.22%

For 9/26/12

0.00%

     0.01%

 -0.02%

0.00%

0.00%

   0.13%

 

 

 

 

 

 

 

Month-To-Date 9/27/12

1.09%

     1.15%

 1.24%

0.69%

1.38%

2.82%

12/31/11 – 9/27/12

8.10%

     8.24%

9.25%

5.63%

9.31%

15.71%

12/31/10 – 9/27/11

   -1.06%

   -1.06%

   -2.40%

   -0.35%

   -0.93%

   -5.01%

Source: S&P/LSTA Leveraged Loan Index.

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Arcapita seeks court approval of first-ever Islamic DIP facility; “Murabaha DIP,” requires approval by a shari’ah advisory board

Arcapita Bank, a Bahraini entity currently under Chapter 11 protection in Manhattan, is seeking bankruptcy court approval of what is purported to be the first-ever shari’ah-compliant debtor-in-possession credit facility, a $150 million loan provided by Silver Point Finance.

Arcapita should need the DIP financing for only a short period, however. In a Sept. 25 motion filed with the court, the bank asked Judge Sean Lane for a mere 60-day extension of its exclusive right to file a reorganization plan, through Dec. 14. In an unusual move, Arcapita also specified that it would forgo its right to seek further exclusivity, and live or die based on the dual-track plan it intends to put forth.

Silver Point will provide and syndicate the so-called “Murabaha DIP,” with an agreed margin of L+105, and a LIBOR floor of 2%, which must be approved by a shari’ah advisory board. The board will then issue a “fatwa” declaring the facility is in compliance with the principles of Islamic finance, according to court documents. “Murabaha” refers to a type of loan that does not bear interest, as interest is forbidden under Islamic religious law. Instead, generally speaking, a murabaha loan is a cost-plus financing under which the lender purchases the borrower’s collateral and is repaid in installments at a prefixed profit margin.

In his declaration filed in support of the DIP, Rothschild managing director Homer Parkhill said “the proposed transaction is unique because of the complexity involving compliance with Shari’ah law, and therefore, there are aspects that are not necessarily comparable to typical debtor in possession financings.” The extent of those unique aspects remains unclear, however, as certain portions of Parkhill’s declaration – and the entirety of two accompanying exhibits filed with the court – were redacted.

Arcapita is only now seeking DIP financing, six months into its Chapter 11 proceedings, because it thus far has had sufficient funds to pay its restructuring expenses without the need for post-petition financing or the use of any secured lender’s cash collateral. At this point, however, in order to avoid being forced into the premature sale of any of the bank’s current investments, Arcapita sought DIP financing that could also be converted into an exit facility.

Under the terms of the proposed Murabaha DIP, Silver Point will be entitled to a commitment fee of 1.5%, or $2.25 million, and a breakup fee of 0.75%, or $1.125 million, should Arcapita find alternative financing. On Friday, before the identity of the lender had been revealed, Judge Lane approved financing-related expense reimbursement of up to $500,000, but Silver Point’s proposed agreement allows it expenses of up to $900,000.

The financing commitment also specifies that any unused portion of the Murabaha DIP at the time of Arcapita’s exit from Chapter 11 may be converted into an exit facility that will mature on the third anniversary of the exit, with a margin that may be increased by up to 2% each year.

Toggle plan
Arcapita’s short extension request and promise not to seek another one came as a surprise, in large part because Arcapita filed Chapter 11 in the first place to avoid losing control of its future to two hedge funds: subsidiaries of Fortelus Capital Management and Davidson Kempner Capital Management (see “Arcapita faces scrutiny from hedge funds at first-day hearing,” LCD News, March 21, 2012). Nonetheless, Arcapita said it won’t seek further exclusivity because its management team feels that if the bank cannot propose a confirmable plan by Dec. 14, “then the creditors have just resigned themselves to eternal fighting rather than resolution through compromise. Hence, additional extensions of the exclusive filing period and the further hard work of debtors’ management will not resolve those issues.”

Arcapita made its initial Chapter 11 filing on an emergency basis, with only a few days’ notice, and as such its legal team and financial advisors said they have spent the first six months of the case getting a grasp on the bank’s complex business and capital structure. KPMG was retained in April to value Arcapita’s interest in 27 companies and other portfolio assets – including European energy company Viridian and J. Jill, a U.S.-based women’s clothing company – and eventually determined a total value of about $1.4 billion.

By Dec. 14, Arcapita said it will have filed a “toggle plan,” offering two potential paths out of Chapter 11: a “new money” plan, assuming new equity is committed and available in time for a confirmation hearing, or an alternative “standalone plan” for the distribution of Arcapita’s assets. Arcapita said it has already shared the KPMG valuation and its “new money” plan with its creditors, and expects to share its standalone plan by the end of this month.

A hearing on the exclusivity motion is scheduled for Oct. 9 in Manhattan. – John Bringardner

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Open window: Leveraged finance market sets records for 3Q volume

In the third quarter, the leveraged loan market managed to shake off late-spring jitters stemming from Europe, and new-issue volume climbed to $114 billion, from $88 billion between April and June.

That is the highest third-quarter figure on record. The capital markets usually take a time-out in August, but that was not the case this year. With the window open, $20 billion of loans were issued in August, another historical high.

The story was the same in the institutional segment, where volume rose to $81 billion – also a high for the third quarter – from $52 billion in the second quarter.

his analysis is taken from a longer complete LCD News story. Also in the analysis:

  • Annual leverage loan volume
  • Change in outstanding loans and inflows
  • High-yield takeouts
  • S&P/LSTA Leveraged Loan Index returns
  • Average new-issue yield to maturity for leveraged loans
  • Average new-issue offer price
  • Covenant-lite volume
  • Leveraged loan M&A volume
  • Leveraged loan PE-backed dividend volume
  • Monthly volume
  • Institutional forward calendar
  • Institutional M&A forward calendar
  • Average bid of LCD’s flow-name composite
  • Average new-issue yield to maturity
  • Quarterly high-yield volume
  • Annual high-yield volume
  • Leveraged finance volume


Steve Miller

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Introducing HighYieldBond.com, a free site promoting the asset class

Leveraged Commentary & Data is excited to launch HighYieldBond.com, a free website aimed at promoting and analyzing today’s very active high yield bond asset class.

HighYieldBond.com will feature select free news stories and analysis from LCD detailing high yield transactions, trends and analysis. It will also feature an online version of LCD’s High Yield Bond Market Primer, which details how bonds are structured, priced and sold. The Primer also gives a brief history of the market, including features such as the largest high yield deals ever.

Also on HighYieldBond.com

  • Updated statistical analysis of market volume, new-issue yields, secondary prices, and index levels
  • A dedicated Jobs section featuring recent leveraged finance jobs postings from top recruiters and companies
  • Select insight and commentary by high yield expert Marty Fridson, who recently joined LCD to offer his views on the market (you can read about what Marty will be focusing on here)

All content on HighYieldBond.com is free, and is easily sharable on popular social media channels.

 

Like its sister site, LeveragedLoan.com, HighYieldBond.com is intended to promote the asset class. While junk bonds historically have been more visible than leveraged loans, the torrid high yield activity of late has thrust the asset class even further into the spotlight, attracting more interest from investors, and from those on the periphery of the leveraged finance market.

With this activity in mind, HighYieldBond.com is meant to promote the asset class, and to educate those who might be interested in the market, whether they be potential investors, financial journalists, or those considering careers in leveraged finance.

We hope you’ll check it out, and pass it on to others who might find it useful.