The U.S. CLO market is wrapping up its busiest month ever, with more than $14 billion in issuance during March, according to S&P Capital IQ/LCD. March tops off a record first quarter, which has seen $28.62 billion of activity (so far). – Sarah Husband
Bank of America Merrill Lynch and Credit Suisse are holding a lender meeting tomorrow at 10:00 a.m. EDT to launch their $650 million term loan B for Mitel Networks backing its planned $560 million acquisition of Mavenir Systems.
The seven-year term loan will be governed by a net total leverage test, and includes six months of 101 soft call protection.
A $50 million, five-year revolver rounds out the financing.
Bank of America will act as administrative agent.
Proceeds will also be used to refinance Mitel’s existing debt. As of Dec. 31, Mitel had roughly $304 million outstanding under its B term loan due January 2020 (L+425, 1% LIBOR floor). That term loan was used to back Mitel’s merger with Aastra Technologies last year.
Mitel provides business-communications software and services, while Mavenir provides software-based mobile-networking services. The transaction is expected to be completed in the second quarter of 2015.
S&P Ratings revised its outlook on Mitel to stable, from positive, and affirmed the company’s B+ corporate ratings. Moody’s affirmed the Ottawa, Canada-based company at B2 and assigned a Ba3 rating to the new loans. – Chris Donnelly/Richard Kellerhals
Horizon Pharma disclosed that it has obtained a commitment letter from Citigroup and Jefferies providing $900 million of senior secured term loans in connection with the company’s planned $940 million acquisition of Hyperion Therapeutics.
Under the terms of the acquisition, Horizon Pharma will acquire the outstanding shares of Hyperion for $46 per share. The acquisition, which has been approved by both companies’ boards of directors, is expected to close in the second quarter.
Proceeds from the new deal are also earmarked to repay Horizon’s $300 million senior secured credit facility it obtained in 2014 to back the company’s acquisition of Vidara Therapeutics.
Horizon Pharma is a specialty pharmaceutical maker. The Deerfield, Ill.-based company was founded in 2005. – Richard Kellerhals
Morgan Stanley is seeking commitments by tomorrow at 2:00 p.m. EDT on its senior secured financing backing ArcLight Capital Partners’ purchase of Penn Products Terminals after upsizing the financing by $50 million and trimming price talk. The original deadline was Wednesday.
The seven-year term loan B has been increased to $600 million, from $575 million, and pricing was reduced to L+375, with a 1% LIBOR floor, and a range of 99-99.5. By contrast the loan was initially talked at L+425-450, with a 1% floor, at 99.
The five-year revolver has been increased to $150 million, from $125 million, and pricing is now L+375, down from L+425-450.
The term loan includes 12 months of 101 soft call protection. As revived, the term loan would yield 4.93-5.02% to maturity, down from 5.54-5.8% at initial guidance. Incremental term loan proceeds will reduce equity in the transaction, sources said.
The loan is governed by a 6x net leverage test. The loan drew BB/Ba2 ratings, with a 2 recovery rating.
PPT’s facilities store and distribute gasoline, diesel fuel, heating oil, and kerosene, which are shipped on common carrier pipelines into its above ground petroleum-storage tank facilities. – Chris Donnelly/Kerry Kantin
Sycamore Partners this morning announced that Paul Fossati has joined the firm as a managing director and Director of Capital Markets.
In this newly created role, Fossati will be responsible for all financings for the firm’s new investments and its existing portfolio companies. He will also be responsible for managing Sycamore’s relationships with financing sources.
Fossati was previously at Morgan Stanley, where he was a managing director in the firm’s Leveraged & Acquisition Finance Group and head of both the consumer-retail and financial sponsor verticals.
New York-based Sycamore Partners is a private equity firm specializing in consumer and retail investments. The firm has more than $3.5 billion in capital under management. Its portfolio currently includes Aeropostale, Coldwater Creek, Hot Topic, Jones New York, the Kasper Group, Kurt Geiger, MGF Sourcing, Nine West Holdings, Pathlight Capital, Stuart Weitzman, and Talbots. – Kerry Kantin
Citigroup today priced an $856.75 million CLO for Guggenheim Partners Investment Management, which was upsized for a second time, according to sources.
The transaction is structured as follows:
Recall the transaction was initially outlined as $654.55 million, though it had previously been increased to $805.4 million.
The deal has a two-year non-call period, a four-year reinvestment period and a 12-year legal final maturity.
The asset manager yesterday also priced its $558.9 million Kitty Hawk CLO 2015-1 deal via Mitsubishi UFJ Securities, though note this is Guggenheim’s third print in the U.S. this year.
CLO issuance in the year to date now stands at $28.11 billion from 52 deals, according to LCD. March issuance is $13.58 billion from 25 deals. Though there are still a couple more days left in the month, issuance thus far in March is the highest since June 2014, when $13.78 billion of deals priced. – Kerry Kantin
Bolstered by a troika of large, well-rated, corporate M&A loans – Dollar Tree ($6.2 billion), Valeant Pharmaceuticals, ($5.15 billion), and Ball Corp. ($3 billion revolver) – new-issue volume has risen in the first quarter, to $80.7 billion, including $53.9 billion of institutional tranches, from a three-year low of $66.6 billion/$43.4 billion over the prior three months.
Still, participants are not exactly breaking out the cigars and champagne. The primary market is off to a flat-footed start versus the liquidity-heavy/regulation-light first quarter of 2014, when arrangers placed $168 billion of new issues, including $129 billion of institutional facilities. In fact, 2015 is off to the slowest start for any year since 2010. – Steve Miller
This analysis is taken from a longer LCD News story, available to subscribers here, that details first-quarter leveraged loan activity in full.
Business-development company Capitala Finance Corp. has formed a new investment joint venture with Trinity Universal Insurance Company, a subsidiary of Kemper Corp. The new venture, Capitala Senior Liquid Loan Fund I, will focus on investments in broadly syndicated loans beginning in the second quarter.
The initial equity contribution is $25 million, of which Capitala is funding $20 million and Trinity is providing $5 million. In addition to that the new fund secured third-party asset-level financing.
Capitala Finance, a BDC that trades on the Nasdaq under the ticker CPTA, traditionally targets debt and equity investments in middle-market companies generating EBITDA of $5-30 million. The firm focuses on mezzanine and subordinated deals but also invests in first-lien, second-lien and unitranche debt. Capitala’s portfolio as of Dec. 31 consisted of 52 portfolio companies with a fair market value of $480.3 million. Of that total, 31% was senior secured debt investments, 46% was subordinated debt, and 23% was equity and warrants. – Jon Hemingway
There’s a rebound in steeper-priced institutional leveraged loan debt in Europe, according to LCD’s Ruth McGavin, as picky investors are leaving some new-issue deals by the wayside.
California Resources disclosed today that its lender group has approved amendment provisions to its credit facility to provide the company with flexibility under its leverage and interest covenants during a challenging commodities market.
The company’s 6% notes due 2024 gained a point, to 87.50, to yield 7.85%, on the amendment news, while its 5% notes due 2021 were up about seven eighths of a point, to 89.5%, to yield 7.58%.
Under the terms of the amendment, California Resources is now allowed to maintain a leverage ratio based on the schedule below. Previously, the leverage ratio was set at 4.5x.
The interest expense ratio, meanwhile, has been set at 2.5x through the third quarter of 2015 and then at 2.25x in the fourth quarter of 2015, and then back to 2.5x in the first quarter of 2016 and thereafter. The interest expense ratio was previously set at 2.5x.
Also, the lien basket has been reduced to 5%, from 15%. The asset coverage ratio has also been set at 1.05x through Dec. 31, 2016 and at 1.5x thereafter.
The company’s pro rata credit facility is split between a $2 billion revolver and a $1 billion A term loan, both due 2019. Pricing is based on a leverage-based grid, ranging from L+150-225, with commitment fees ranging from 30-50 bps.
J.P. Morgan is administrative agent. The lender group also consists of Bank of America Merrill Lynch, Citigroup, Bank of Tokyo-Mitsubishi UFJ, U.S. Bank, Morgan Stanley, HSBC, Goldman Sachs, Bank of Nova Scotia, Societe Generale, PNC Bank, BB&T, Bank of New York Mellon, Sumitomo Mitsui, Intesa Sanpaolo, and KeyBank.