An underwriter group led by Bank of America Merrill Lynch has scheduled a lender meeting for 11 a.m. EDT on Monday, June 6, to launch the cross-border financing backing the Carlyle Group’s acquisition of Veritas, sources said.
Recall the covenant-lite loan due January 2023 funded in January as the LBO closed. Though official price talk has yet to circulate the market, underwriters BAML, Morgan Stanley, UBS, Jefferies, Barclays, and Citigroup have been privately showing the cross-border term debt in the 90 area in recent weeks, and with M&A-related new-issue activity slowing, early commitments are said to have surpassed underwriters’ initial $500 million target.
Marketing of the loan follows on the heels of the recent sale of the underwriters’ unsecured debt exposure. Underwriters have now placed all $825 million of the notes, with several underwriters breaking ranks for an initial sale in an 83–84 context. Underwriters later moved the remainder of that paper at 86.5, for a yield of roughly 13.35%, according to sources. Goldman Sachs and Credit Suisse, part of the original underwriter group, were involved the initial sale, sources added.
As noted back in January, Symantec Corp. and the Carlyle Group amended the agreed purchase price for Carlyle’s acquisition of Symantec’s Veritas information management business, to $7.4 billion from $8 billion. At the time, Symantec and Carlyle also agreed to increase the amount of offshore cash remaining in Veritas from $200 million to $400 million, which will result in a net consideration to Symantec of $7 billion. This consideration will consist of $6.6 billion in cash and a $400 million equity interest in Veritas.
A revised loan package eventually funded at the caps; both a $2.109 billion term loan B-1 and €497 million euro TLB, which is priced at L/E+562.5, with a 1% LIBOR/Euribor floor. An additional $400 million, second-out TLB-2 is priced at L+762.5, with a 1% LIBOR floor.
The issuer is rated B/B2, while the senior secured debt drew B+/B1 ratings, with a 2L recovery rating from S&P Global Ratings. Agencies assigned CCC+/Caa1 ratings to the unsecured debt, which drew a 6 recovery rating from S&P Global Ratings.
Underwriters haven’t yet made any move to market the additional $750 million of secured notes that were part of the final deal. While structure is fluid, that financing was expected to be a $441 million U.S. dollar tranche and €262 million of euros, sources said.
As reported, the institutional loan component of the transaction launched to market late last year as a $2.45 billion dollar term loan and a €760 million euro tranche, though was shelved due to market conditions. At the time, a cross-border, dual-currency bond financing was also set to include $500 million of seven-year (non-call three) secured notes and $1.775 billion of eight-year (non-call three) unsecured notes. BAML is left lead on the loans, and Morgan Stanley is left lead on the bonds.
Veritas provides information-management software and services, including multiple cloud deployments, managed services, on-premises infrastructure, and core backup and recovery services. — Chris Donnelly
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