Investors receive allocations of Bass Pro $1.74B loan

Investors this afternoon received allocations of Bass Pro Group’s $1.74 billion term loan, which broke for trading at 100/100.5, from issuance at 99.75, and priced at the tight end of L+325-350 talk, with a 0.75% LIBOR floor, according to sources. Bass Pro’s existing term loan due November 2019 totals roughly $1.15 billion and is priced at L+300, with a 0.75% LIBOR floor. The existing loan includes a leverage covenant. The February 2015 acquisition of fishing-boat manufacturer Fishing Holdings from Platinum Equity was financed via borrowings under its $300 million asset-based revolver and a $100 million FILO loan that was expected to be folded into the ABL facility. The new deal funds a $300 million dividend, and will also be used to refinance $275 million of those ABL borrowings. Leverage here is 4.8x, and about 5.15x lease adjusted, all senior. Bass Pro Shops (Outdoor World) is headquartered in Springfield, Mo., and does business under three main brands: Bass Pro Shops, Tracker Marine, and Big Cedar Lodge. Terms:

Borrower Bass Pro Group
Issue $1.74 billion term loan
UoP Dividend recapitalization
Spread L+325
LIBOR floor 0.75%
Price 99.75
Tenor/maturity June 2020
YTM 4.12%
Call protection 12 months 101 soft call
Corporate ratings BB-/Ba3
Facility ratings BB-/B1
S&P recovery rating 3L
Arrangers/bookrunners JPM
Admin agent JPM
Px talk L+325-350/0.75%/99.75; L+350-375/0.75%/99
Notes Leverage 4.8x, and ~5.15x lease-adjusted, all senior

ELO Touch Solutions, backed by Gores, uses equity cure after challenging quarters

ELO Touch Solutions, which is backed by private equity firm The Gores Group, used an equity cure in the recent reporting period.

As a result, Standard & Poor’s revised the company’s outlook to negative, from stable, on May 28. The ratings agency affirmed the company’s CCC+ corporate rating at the same time.

“The outlook revision reflects Elo’s use of an equity cure in the second fiscal quarter of 2015, resulting from challenged performance during the first half of the year, and our view that the company will likely require additional support in the future to maintain covenant compliance,” Standard & Poor’s analyst Christian Frank said in a research note on May 28.

Standard & Poor’s also affirmed the B- rating on the company’s $175 million first-lien term loan due 2018 and its $15 million revolving credit facility due 2017. The loan has a recovery rating of 2, indicating expectations for recovery in the higher half of a 70-90% range on the debt in case of a default.

Standard & Poor’s also affirmed the CCC- issue-level rating, with a recovery rating of 6, on the company’s $85 million second-lien term loan due 2018, of which $37.5 million is outstanding. The 6 rating indicates an expected recovery of zero to 10% if the loan defaults.

Revenue is expected to decline in the mid-single digits in fiscal 2015, after growing by that degree in the fiscal year ended Sept. 31, 2014, Standard & Poor’s said in a research note.

Investment in new products is expected to weigh on margins in the 2015 fiscal year, then rebound. A stronger U.S. dollar has also hurt revenue and earnings this year, Standard & Poor’s said.

New products will probably help leverage, which is expected “increase modestly” this year from the low-5x area as of March 27, 2015. That level is down from an 8x peak as of June 28, 2013, Standard & Poor’s said.

“We believe that ELO’s new point-of-sale, digital signage, and touch screen component products could result in revenue growth over the next few quarters,” said S&P analyst Frank. “In the longer term, we believe that the company’s financial sponsor ownership will likely preclude sustained leverage reduction.”

Investors received allocations of a $260 million first- and second-lien financing backing the Gores Group’s $380 million purchase of ELO Touch Solutions in June 2012. Arrangers were Credit Suisse and Goldman Sachs.

The deal was structured as a $175 million, six-year first-lien term loan, which was issued at 96 and priced at L+650 (1.5% LIBOR floor), and a $85 million second-lien term loan, which was also issued at 96, with pricing of L+1,050 (1.5% floor). At issuance, corporate ratings were B/B2.

Moody’s has since downgraded the company to Caa1.

ELO Touch Solutions, based in Milpitas, Calif., supplies touch screens, touch monitors, and all-in-one touch computers. – Abby Latour

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Avago Technologies nets financing for $37B Broadcom purchase

Avago Technologies plans to finance its $37 billion purchase of Broadcom, which was announced this morning, with $15.5 billion of new syndicated term loans, according to the company. Financing will come from Bank of America Merrill Lynch, Credit Suisse, Deutsche Bank, Barclays, and Citigroup, sources said.

The issuer expects to refinance $6.5 billion of existing debt facilities and raise $9 billion of new money. A $500 million revolver would be undrawn at closing. The transaction would leverage Avago at roughly 2.7x, giving full credit for $750 million of synergies. Net of $1.3 billion of cash on hand, adjusted leverage would fall to 2.5x, according to an investor presentation.

In the secondary market, Avago’s B term loan due 2021 (L+300, 0.75% floor) was steady on the news this morning, quoted at 100.125/100.375. The $4.6 billion loan was issued at 99.5 in April 2014 to support its $6.6 billion acquisition of LSI Corp.

Enterprise value of the combined company would be roughly $77 billion. The combined company will annual revenue of approximately $15 billion.

Under the terms of the deal, Avago will acquire Broadcom for $17 billion in cash and the economic equivalent of approximately 140 million Avago ordinary shares, valued at $20 billion as of May 27, 2015, resulting in Broadcom shareholders owning approximately 32% of the combined company. Based on Avago’s closing share price as of May 27, 2015, the implied value of the total transaction consideration for Broadcom is $37 billion. – Staff reports


Lone Star Distribution bought by Sheridan Legacy Group with debt from TCF Capital

TCF Capital provided senior financing for an acquisition of Lone Star Distribution by private equity firm Sheridan Legacy Group, sources said.

Spell Capital Partners, which was among the sellers, provided mezzanine financing.

Lone Star, based in Dallas, is a wholesale distributor of sports and fitness supplements. Products are sold online, as well as distributed to stores, fitness centers, and franchise smoothie bars.

Chicago-based Sheridan Legacy Group targets lower middle-market companies for buyouts and recapitalizations for equity investments of $10-30 million.

Spell Capital Partners, based in Minneapolis, manages private equity and mezzanine capital. – Abby Latour

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Dell launches repricing/refi of institutional loans

An arranger group led by Bank of America Merrill Lynch is launching a repricing and refinancing of a portion of Dell International’s B term loan and all of its euro-denominated term loan, sources said.

The $3 billion term loan B-2 and the €622 million term loan will have the same April 29, 2020 maturities as the current loans. Price talk is L/E+300-325, with a 0.75% floor, offered at 99.75. Dell would refresh the 101 soft call protection for six months. At current talk, the loans would yield roughly 3.86-4.12% to maturity.

The issuer also is amending its loans to conform the ability to classify and reclassify basket utilization in the investment and restricted payment covenants with the formulation applicable to basket usage in the bond indenture, sources said. Term loan C investors are offered a five basis point consent fee.

Commitments and consents are due on Tuesday, June 2. The arranger group includes BAML, J.P. Morgan, Citigroup, Goldman Sachs, and UBS. RBC is syndication agent, and Barclays is documentation agent.

Michael Dell and Silver Lake took the company private in a $25 billion transaction in late 2013. A $4.66 billion, 6.5-year TLB was priced at L+350, with a 1% floor), while a $1.5 billion, five-year amortizing TLC was priced at L+275, with a 1% floor. The €700 million, 6.5-year loan cleared at E+375, with a 1% floor.

Dell is rated BB+/Ba2. The term debt is rated BBB/Ba1 recovery rating. Dell released its financial results yesterday. The loan, which was quoted in a 100.25/100.5 market yesterday, saw brief weakness post the numbers, but quickly recovered. – Chris Donnelly


DiversiTech receives $153M of loans, led by BMO Harris Bank

BMO Harris Bank was administrative agent on $153 million in first-lien credit facilities backing DiversiTech Corporation.

Middle-market private equity firm Jordan Company this month unveiled its acquisition of DiversiTech.

DiversiTech, based in Duluth, Ga., sells engineered components for heating, ventilation, air conditioning, and refrigeration systems. – Abby Latour

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Varsity Brands, controlled by Charlesbank Capital Partners, issues $805M loan

Accounts yesterday received allocations of the first-lien term loan for Varsity Brands, which ticked to 100.25/101, from an opening market of 100.125/100.875, and issuance at par, according to sources. The covenant-lite loan due December 2021 is priced at L+400, with a 1% LIBOR floor. Via the transaction, the issuer is repricing its approximately $755 million first-lien term loan down from L+500, with a 1% floor, while also layering in an additional $50 million to repay a portion of its second-lien term loan due 2022. Goldman Sachs arranged the deal, which triggers the 101 soft call premium on the existing loan. The repricing component of the transaction cleared in line with talk, though the offer price on the add-on was tightened to par, from original guidance of 99.75. Memphis, Tenn.-based Varsity Brands, which is controlled by Charlesbank Capital Partners, is a manufacturer, marketer, and distributor of sports, cheerleading, and achievement-related products to schools across the U.S. Terms:

Borrower Varsity Brands
Issue $805 million first-lien term loan
UoP Repricing, partial refi of 2nd-lien
Spread L+400
LIBOR floor 1.00%
Price 100.000
Maturity December 2021
YTM 5.1% at par/5.29% including 101 SC payout
Call protection six months 101 soft call
Corporate ratings B/B2
Facility ratings B+/B1
S&P recovery rating 2L
Financial covenants none
Leverage 3.8x first-lien, 5.2x total
Bookrunners GS
Admin agent GS
Sponsor Charlesbank Capital Partners
Px talk L+400/1%/100 (repricing) /99.75 (add-on)
Notes Upsized by $50 million as tack-on was added to deal during the syndication process

First Data seeks loan amendment, new five-year revolver

First Data has approached its lenders for an amendment that would make a host of investor-friendly changes to its credit agreement as the issuer seeks to put in place a new five-year revolver, according to sources.

The credit card processing firm is seeking to put in place a revolver of up to $1.25 billion, which would replace its existing $1.016 billion revolver ahead of its September 2016 maturity. Pricing on the new facility is outlined as L+350, which is the same coupon as the bulk of the issuer’s term debt, but compares with L+400 on the existing RC, sources noted.

Consents are due by noon EDT on Thursday for the amendment request. There is no fee on offer.

For reference, the loan is governed by a senior secured leverage covenant. Leverage per the covenant was 4.03x at the end of the first quarter, versus a 6x covenant, SEC filings show.

Credit Suisse is administrative agent.

First Data last tapped the loan market in July for a repricing of its term loans maturing in March and September 2018 and for a $350 million tack-on to its dollar-denominated term loan due March 2018. Via the transaction, the issuer reduced pricing to L/E+350, from L/E+400. Proceeds from the incremental debt were earmarked to help refinance PIK-holdco notes and place cash on the balance sheet. Recall the company last year used proceeds from a $3.5 billion equity raise to refinance bonds.

Note the company’s term loan due March 2017 is also priced at L+350, while the term loan due March 2021 is priced at L+400.

First Data, which is controlled by KKR, is rated B/B3. The existing loans are rated B+/B1, with a 1 recovery rating from S&P. –Kerry Kantin


BlueArc Capital’s buyout of Brunswick Bowling financed by Gladstone

Gladstone Investment Corporation provided debt for a buyout of Brunswick Bowling Products by BlueArc Capital Management.

Gladstone Investment provided equity and secured debt. Capitala Finance was also part of the transaction.

Brunswick Corp. was the seller. Last year, Brunswick completed a sale of its retail bowling centers to Bowlmor AMF. Proceeds from both sales are expected to range from $270-290 million, depending on tax and liabilities.

BlueArc Capital Management, based in Atlanta, is a private investment firm.

Brunswick Corp., based in Lake Forest, Ill., targets growth investments and acquisitions in the marine and fitness segments. Brands include Mercury and Mariner outboard engines; Life Fitness and Hammer Strength fitness equipment; and Brunswick billiards tables and table tennis.

Gladstone Investment Corporation, a BDC that trades on Nasdaq under the symbol GAIN, invests in debt and equity of small- and mid-size businesses. – Abby Latour

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Loan bids essentially unchanged following long holiday weekend

The average bid of LCD’s flow-name composite was essentially unchanged in today’s reading, easing one basis point to 99.93% of par, from 99.94% on May 21. Activity was muted over the past two sessions and the market was closed yesterday in observance of Memorial Day.

Among the 15 names in the sample, three loans advanced, three declined, and nine were unchanged from the prior reading. Posting the largest move, at a quarter of a point, was the Charter Communications F term loan due 2021 (L+225, 0.75% floor), which dipped to a 99.25 bid on news that the cable operator has agreed to buy rival Time Warner Cable in a deal that values the target at $78.7 billion. While details on the structure of the debt financing have yet to surface, the cable operator disclosed in SEC filings today that it expects to incur roughly $23 billion of new debt in connection with the TWC purchase, as well as an additional $2 billion associated with the concurrent $10.4 billion proposed acquisition of Bright House Networks.

Market participants are optimistic that the mega-merger will yield a jumbo financing for the institutional loan market, which would help to balance out today’s technical imbalance that has fueled a fresh wave of opportunistic repricing and refinancing activity. In the month to date, repricing activity has accelerated to $31.9 billion, surpassing April’s recent high mark of $19.2 billion.

With the average loan bid slipping one basis point, the average spread to maturity was stable, at L+386

By ratings, here’s how bids and the discounted spreads stand:

  • 100.01/L+358 to a four-year call for the nine flow names rated B+ or higher by S&P or Moody’s; STM in this category is L+359.
  • 99.81/L+428 for the six loans rated B or lower by one of the agencies; STM in this category is L+427.

Loans vs. bonds 
The average bid of LCD’s flow-name high-yield bonds rose 31 bps, to 102.01% of par, yielding 6.21%, from 101.70 on May 21. The gap between the bond yield and discounted loan yield to maturity stands at 209 bps. – Staff reports

To-date numbers

  • May: The average flow-name loan is down 37 bps from the final April reading of 100.30.
  • Year to date: The average flow-name loan is up 301 bps from the final 2014 reading of 96.92.

Loan data

  • Bids lower: The average bid of the 15 flow names fell one basis point to, 99.93% of par.
  • Bid/ask spread wider: The average bid/ask spread widened one basis point, to 31 bps.
  • Spreads constant: The average spread to maturity – based on axe levels and stated amortization schedules – was unchanged, at L+386.