Avago sets lender meeting to launch $7.5B leveraged loan backing Broadcom buy

Avago Technologies’ $7.5 billion term loan B will launch on Tuesday Nov. 3 at 1 p.m. EST via an arranger group led by Bank of America Merrill Lynch, sources said.

Proceeds of the seven-year covenant-lite term loan will be used to partially finance the cash portion of Avago’s acquisition of Broadcom, refinance existing debt, and pay fees and expenses. The arranger group includes BAML, Credit Suisse, Deutsche Bank, Barclays, Citi, Wells Fargo, BMO, Nomura and Bank of Tokyo-Mitsubishi UFJ.

The issuer previously wrapped the pro rata portion of its loan deal as the a Credit-Suisse-led arranger group syndicated a $4.25 billion term loan A. Pricing on the five-year TLA remains at L+150–200, tied to a ratings-based grid.

Avago Technologies in May disclosed that it planned to finance its $37 billion purchase of Broadcom with new term loans, and will also refinance $6.5 billion of existing debt facilities. Avago’s roughly $4.6 billion B term loan due 2021 (L+300, 0.75% LIBOR floor) was issued at 99.5 in April 2014 to support its $6.6 billion acquisition of LSI Corp.

The transaction is expected to leverage Avago at roughly 2.7x. Net of $1.3 billion of cash on hand, adjusted leverage would fall to 2.5x.

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


Middle market loan volume in Oct on pace to set six-year low

Heading into month-end, October volume for middle market loans is on pace to set a six-year low at just $920 million. The last time total issuance for deals with a size of $350 million or less was lower was in February 2009, at $642 million. This will mark the fifth straight month of declining new issue volume. With the slowing pace of issuance, second-half volume now stands at $9 billion, compared to more than $21 billion over the first six months of the year. — Jon Hemingway

New-issue middle-market loan volume (loans of up to $350 million)

MM loan volume Oct 28 2015


Benefit Street prices $512M CLO via Citi

Citi yesterday priced a $512 million CLO for Benefit Street Partners, according to market sources.

The pricing details for Benefit Street Partners VIII are as follows:

The deal will close on Dec. 1. The non-call and reinvestment periods end on Jan. 20, 2018 and Jan. 20, 2020, respectively. The legal final maturity is on Jan. 20, 2028. A weighted-average life test also runs for eight years after the close until Dec. 1, 2023.

Up to 60% of the loans in the portfolio can be covenant-lite, according to marketing documents.

Benefit Street Partners VIII is the third new CLO from the manager this year and the fourth deal when including the recent reset of the $415.3 million Benefit Street Partners I CLO.

Year-to-date, 159 new-issue CLOs have priced for a total of $83.71 billion, according to LCD data. In October, 11 deals have priced for a total of $5.42 billion. — Andrew Park

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Investors Again Withdraw Cash From US Leveraged Loan Funds; Streak at 14 Weeks

Loan funds reported a $164 million retail-cash outflow for the week ended Oct. 28, building upon last week’s outflow of $169 million, according to Lipper. This is the 14th consecutive withdrawal, for a total redemption of $5.8 billion over that span.

leveraged loan fund flows

The outflow was all from mutual funds, at $212 million, while ETFs countered with an inflow of $48 million, for an inverse 29% of the total. Last week’s outflow was 98% mutual funds, and the two weeks prior were also inverse, with ETF inflows filling in mutual fund outflows, suggesting the potential for fast money hedging strategies and market timing.

Despite another a solid outflow, the trailing four-week average moderates to negative $187 million per week, from negative $343 million last week and negative $365 million two weeks ago.

The year-to-date outflow deepens to $9.6 billion, with just 4% tied to ETFs, versus an outflow of $10.1 billion at this point last year, with no measurable ETF influence.

In this past week’s report, the change due to market conditions was negative $29 million, which is essentially nil against total assets, which were $85.8 billion at the end of the observation period. The ETF segment accounts for $6.3 billion of the total, or approximately 7% of the sum. — Matt Fuller

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NXP on deck for tomorrow with $2.7B TLB for Freescale acquisition

A Credit Suisse–led arranger has scheduled a lender call for 10:45 a.m. EDT tomorrow, Oct. 30, to roll out a $2.7 billion covenant-lite B term loan backing NXP Semiconductors’ planned acquisition of Freescale Semiconductor, according to sources.

Ahead of tomorrow’s call, the arrangers are circulating guidance of L+325, with a 0.75% LIBOR floor and a 99 offer price. Lenders to the five-year loan are offered six months of 101 soft call protection.

At the proposed guidance, the loan offers a yield to maturity of about 4.3%. Note the company’s recently issued 4.125% unsecured notes due 2020 are trading in a 102.5 context, yielding just over 3.5%.

Credit Suisse, Barclays, Bank of America Merrill Lynch, Morgan Stanley, and Deutsche Bank are arranging the transaction. Commitments will be due on Thursday, Nov. 5.

As reported, the semiconductor manufacturer in early March agreed to purchase Freescale in a transaction that values the combined enterprise at just over $40 billion. Freescale shareholders will receive $6.25 in cash and 0.3521 of an NXP ordinary share for each Freescale common share held at the close of the transaction—implying a total enterprise value for Freescale of roughly $16.7 billion, including net debt.

Recall the financing commitment originally provided for a $6.5 billion TLB, but that has been whittled down to $2.7 billion. First, the issuer executed a change-of-control waiver for about $1.5 billion of bonds, and then reduced the amount by another $1 billion by placing a two-part bond deal in June. Also reducing the size of the TLB is the company’s planned $1.8 billion sale of its RF Power business to JAC Capital, sources added.

Note that with the TLB sized at $2.7 billion, the transaction represents an approximately $735 million paydown to the institutional market, since Freescale has about $3.435 billion of institutional term loans outstanding that will be refinanced. NXP’s existing institutional loans will remain in place in connection with the merger.

NXP is based in the Netherlands, but its shares trade on the Nasdaq under the ticker NXPI. The company is currently rated BB+/Ba2. — Kerry Kantin

This story first appeared on, LCD’s subscription site offering complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here



GNC Leveraged Loan Debt Dips Anew On 3Q Numbers Miss; Shares Tumble

The GNC Holdings covenant-lite term loan due 2019 (L+250, 0.75% LIBOR floor) slid to a 94.5/96.5 market today after the nutritional supplements retailer this morning released third-quarter results that fell shy of Street expectations. By contrast, the loan was quoted at 97.25/98.25 prior to the results yesterday, according to sources.

The company reported third-quarter revenue of $672.2 million, which is up 2.4% from the year-ago period but shy of the S&P Capital IQ consensus estimate of $684.1 million. The company also said same-store sales fell 0.3% in domestic company-owned stores (including sales) and fell 1.3% in domestic franchise locations.

Furthermore, the company lowered its earnings-per-share guidance for the full year 2016 to $2.85–2.90, from a range of $3.00–3.10 outlined in July. The company’s shares, which trade on the New York Stock Exchange under the ticker GNC, fell nearly 26%, to $28.62.

With today’s drop, the loan is approaching recent lows touched last week on news that the Oregon Attorney General filed a lawsuit against the company, alleging it sold supplements that contain ingredients that are not approved in the United States. The company has said the claims are “without merit” and that it “intends to vigorously defend against these allegations.” The paper was quoted as low as 93.5/95.5 following that news, down from 99.25/100, though had recovered from lows prior to the earnings release.

As of Sept. 30, there was $1.178 billion outstanding under the TLB following a $164.3 million paydown in August with a portion of the proceeds from a convertible note issue, according to the company. J.P. Morgan is administrative agent.

The issuer is rated BB+/Ba3, while the term loan is rated BBB–/Ba2, with a 2H recovery rating from S&P.

General Nutrition Centers is a global specialty retailer of health and wellness products, which include vitamins, minerals, and herbal supplements, sports-nutrition products, diet products, and other wellness products. — Kerry Kantin


Monroe Capital Taps Sturrock to Lead Debt Origination in Canada

Monroe Capital hired Mark Sturrock to lead debt origination in Canada. Previously, Monroe covered Canadian origination efforts from Chicago.

Sturrock will be responsible for private equity sponsored and non-sponsored middle market companies. He will be based in Toronto.

He will report to Tom Aronson, who is head of originations at Monroe Capital.

Sturrock most recently worked at Salus Capital Partners, where he was a senior managing director.

Previously, he was senior director and team leader at Canadian Imperial Bank of Commerce, as well as director of originations and senior vice president at Wells Fargo Foothill Canada. He also worked at Royal Bank of Canada for 21 years. — Abby Latour

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First Eagle seeks commitments tomorrow on revised $1.35B leveraged loan

Morgan Stanley, HSBC, Bank of America Merrill Lynch, Citigroup and UBS are seeking commitments by tomorrow at 10 a.m. EDT on their revised $1.5 billion credit package for First Eagle Investment Management. Allocations are expected thereafter.

Price talk on the $1.35 billion, seven-year B term loan has moved to L+400, with a 0.75% LIBOR floor, offered at 98. As well, the 101 soft call premium has been expanded to 12 months, from six months. The issuer also dropped a proposed MFN sunset provision, tightened the excess-cash-flow sweep and reduced the size of the incremental facility’s free-and-clear component.

The covenant-lite term loan was talked earlier at L+350–375, with a 0.75%, at 99. As revised the loan will yield 5.2% to maturity, up from 4.5–4.76% at initial guidance.

The transaction also includes a $150 million, five-year revolver.

The transaction backs Blackstone and Corsair Capital’s roughly $4 billion acquisition of First Eagle Investment Management from TA Associates, according to sources.

Loan and issuer ratings are BB+/Ba1, with a 3H recovery rating on the term loan.

Morgan Stanley will be administrative agent.

First Eagle’s senior management and investment leadership will retain significant ownership in the firm. The family shareholders, who are members of the founding Arnhold family, will remain substantial shareholders in First Eagle and will retain their role on the Board following the closing of the transaction.

First Eagle is an independent, privately held asset-management firm with about $90 billion of assets under management as of Sept. 30. — Chris Donnelly/Kerry Kantin

This story first appeared on, LCD’s subscription site offering complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here


KPC Healthcare nets $140M loan led by Credit Suisse Park View BDC

Hospital group KPC Healthcare received a $140 million term loan arranged by Credit Suisse Park View BDC.

The financing transaction closed in August.

Proceeds backed an employee stock ownership plan (ESOP) conversion at the company.

KPC Healthcare is a four-hospital system in Orange County, Calif., with 800 beds as well as cardiology, trauma, urology, neurology, and neonatology care services. The hospitals are Orange County Global Medical Center, Anaheim Global Medical Center, Chapman Global Medical Center, and South Coast Global Medical Center.

Credit Suisse Park View is a non-traded BDC that originates and invests in secured debt, unsecured debt, and some equity of U.S. middle market companies. Investments totaled $311 million at fair value as of June 30. Credit Suisse Asset Management is the investment advisor. — Abby Latour

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