A Credit Suisse-led arranger group has scheduled a bank meeting for 10:00 a.m. EDT on Tuesday, June 9, to launch a $1.45 billion first- and second-lien financing backing Apollo Management’s purchase of Protection One and ASG Security, according to sources.
The financing is structured as a $1.055 billion, six-year first-lien term loan; a $300 million, seven-year second-lien term loan; and a $95 million revolver. The term loans will be covenant-lite.
Ahead of Tuesday’s meeting, the arrangers are circulating guidance of L+400, with a 1% LIBOR floor and a 99 offer price on the first-lien term loan, and L+875, with a 1% floor and a 98 OID on the second-lien, according to sources. First-lien lenders are offered six months of 101 soft call protection, while the second-lien would include 102, 101 hard call premiums in years one and two, respectively.
At the proposed guidance, the first-lien offers a yield to maturity of about 5.3%, while the second-lien would yield about 10.55%.
Credit Suisse, Barclays, Deutsche Bank, Jefferies, RBC Capital Markets, and Goldman Sachs are arranging the transaction. Commitments will be due on Tuesday, June 23.
Apollo last month agreed to purchase both Protection One and ASG Security and merge the two businesses. The purchase prices of the transactions were not disclosed, but the combined company is expected to generate annual revenue in excess of $500 million, according to Protection One. Closing is expected in mid-2015.
Protection One, a business and home security company, is currently owned by GTCR.
Protection One’s existing loans will be refinanced in connection with the transaction. The issuer has in place a $687 million term loan and a $55 million revolver, according to a recent S&P report. The existing term loan due March 2019 (L+325, 1% floor) is governed by a leverage test. – Kerry Kantin