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Loan funds net fifth consecutive outflow, but with small ETF inflow

U.S. leveraged loan funds saw a net outflow for a fifth consecutive week, with the redemption of $75 million in the week ended April 27, boosting the outflow to $692 million over the five-week span, according to Lipper. But with moderating redemption, the trailing-four-week observation contracts a bit, to negative $126 million this past week, from negative $154 million last week.

Loan fund flows April 27 2016

Today’s negative reading shows mutual fund outflows of $98 million filled in by ETF inflows of $23 million. There hasn’t been a misaligned reading like this since seven weeks ago, when mutual fund outflows of $432 million were dented by ETF inflows of $75 million.

Year-to-date outflows from leveraged loan funds are essentially steady at $5.4 billion, with just 4% ETF-related. A year ago at this juncture, it was also mostly all mutual fund outflows, at $3.5 billion, but versus a small inflow of $144 million to ETFs, for a net negative reading of $3.4 billion.

The change due to market conditions this past week was barely positive, at 0.4%, with a gain of $240 million against total assets, which were $60.5 billion at the end of the observation period. ETFs represented about 9% of the total, at $5.5 billion. —Matt Fuller

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US Leveraged Loan Funds See Fifth Straight Week of Withdrawals

us loan fund flows

U.S. leveraged loan funds saw a net outflow for a fifth consecutive week, with the redemption of $75 million in the week ended April 27, boosting the outflow to $692 million over the five-week span, according to Lipper. But with moderating redemption, the trailing-four-week observation contracts a bit, to negative $126 million this past week, from negative $154 million last week.

Today’s negative reading shows mutual fund outflows of $98 million filled in by ETF inflows of $23 million. There hasn’t been a misaligned reading like this since seven weeks ago, when mutual fund outflows of $432 million were dented by ETF inflows of $75 million.

Year-to-date outflows from leveraged loan funds are essentially steady at $5.4 billion, with just 4% ETF-related. A year ago at this juncture, it was also mostly all mutual fund outflows, at $3.5 billion, but versus a small inflow of $144 million to ETFs, for a net negative reading of $3.4 billion.

The change due to market conditions this past week was barely positive, at 0.4%, with a gain of $240 million against total assets, which were $60.5 billion at the end of the observation period. ETFs represented about 9% of the total, at $5.5 billion. — Matt Fuller

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This story first appeared on www.lcdcomps.com, 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.

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CORE Entertainment files Ch. 11 as American Idol popularity wanes

CORE Entertainment, the owner and producer of American Idol, has filed for bankruptcy as the once-popular television show concluded its final season.

The company’s debt included a $200 million 9% senior secured first-lien term loan due 2017 dating from 2011, and a $160 million 13.5% second-lien term loan due 2018. U.S. Bank replaced Goldman Sachs as agent on both loans, which stem from Apollo’s buyout of the company, formerly known as CKx Entertainment, in 2012.

Principal and interest under the first-lien credit agreement has grown to $209 million, and on the second-lien loan to $189 million, court documents showed.

A group of first-lien lenders consisting of Tennenbaum Capital Partners, Bayside Capital, and Hudson Bay Capital Management have hired Klee, Tuchin, Bogdanoff & Stern and Houlihan Lokey Capital as advisors. Together with Credit Suisse Asset Management and CIT Bank, these lenders hold 64% of the company’s first-lien debt.

Crestview Media Investors, which holds 34.8% of first-lien debt and 79.2% under the second-lien loan, hired Quinn Emanuel Urquhart & Sullivan and Millstein & Co. as advisors.

The debtor also owes $17 million in principal and interest under an 8% senior unsecured promissory note.

CORE Entertainment, and its operating subsidiary Core Media Group, owns stakes in the American Idol television franchise and the So You Think You Can Dance television franchise.

The company’s business model relied upon continued popularity of American Idol and So You Think You Can Dance. In late 2013, the company sold ownership of most of rights to the name and image of boxer Muhammed Ali, and of trademarks to the name and image of Elvis Presley and the operation of Graceland, and failed to acquire assets to offset the loss of that revenue.

The bankruptcy filing was blamed on the cancellation of American Idol by FOX for the 2017 season. Following a decline in ratings, FOX said that the 2016 season would be the show’s final one.

The filing was today in the U.S. Bankruptcy Court for the Southern District of New York. — Abby Latour

Follow Abby on Twitter @abbynyhk for middle market deals, leveraged M&A, BDCs, distressed debt, private equity, and more.

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Intelsat debt, shares edge higher on 1Q results, new bond guarantee

Intelsat debt and shares advanced today after the satellite giant reported better-than-expected first-quarter results and reaffirmed its 2016 sales and earnings outlook based on the ongoing demand for broadband data, a heavy backlog of contracts, the successful launch of a new satellite last month, and preparation for the launch of more of its next generation fleet.

Most notably, however, investors heard that that a first-lien guarantee is now in place on a previously non-guaranteed series of Intelsat Jackson 6.625% senior notes due 2022, and that CC/Caa3 paper surged six points, to 64/65, according to sources.

Other bonds at various spots in the multi-tiered issuer were mixed. The previously guaranteed Intelsat Jackson 5.5% senior notes due 2023, which are notched higher, at CCC/Caa2, slipped two points, with trades reported on either side of 63, while the same entity’s first-lien 8% notes due 2024 dipped three quarters of a point, to 103.25/103.75, according to sources and trade data.

Meanwhile, at parent Intelsat Luxembourg 8.125% notes due 2023, which are a deeper step lower, at CC/Ca, the paper advanced two points, to 28.5/29.5, according to sources. And other “Jackson” bonds were steady, like the 7.5% notes due 2021, which held 69.5/70.5, the sources added.

Over on the NYSE, the company’s shares, which trade under the symbol “I,” increased roughly 6.5% this morning, to $3.93.

In the loan market, the Intelsat’s B-2 term loan due 2019 (L+275, 1% floor) was marked 94.125/94.625 on the results, up from either side of 94 prior, albeit a 95 context a week ago, according to sources.

Revenue in the quarter was $552.6 million, which was down from $602.3 million in the year-ago first quarter, but roughly 2% higher than the S&P Global Market Intelligence consensus estimate for $542.8 million, filings showed. As for the EBITDA result, first-quarter earnings were $407.5 million, which was down from $460.5 million last year, but right in line with the S&P GMI consensus mean estimate for $408.4 million.

Looking ahead, the company left unchanged via reaffirmation its full-year 2016 outlook for revenue of $2.14–2.20 billion and adjusted EBITDA to $1.625–1.675 billion, filings show.

Recall that the abovementioned, first-lien 8% notes were issued at par last month, with B–/B1 ratings, via Goldman Sachs and Guggenheim to support general corporate purposes, including prepayment in full of an intercompany loan of $360 million that upstreamed a dividend to parent “Luxembourg.” That issuance halted access to the “Jackson” undrawn revolver and triggered the guarantee to the 6.625% notes, according to a company statement.

Luxembourg-based Intelsat completed its IPO in April 2013, but a BC Partners–led group named Serafina still owns a majority of the satellite concern’s common shares. Prior to today’s rally, the company’s market capitalization on the NYSE was approximately $400 million. — Matt Fuller/Kerry Kantin

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ExamWorks nets financing for buyout by Leonard Green

Bank of America Merrill Lynch, Barclays, and Deutsche Bank have committed to provide the debt financing that will back the roughly $2.2 billion buyout of NYSE-listed ExamWorks by Leonard Green & Partners. Details of the financing are not yet available.

The private equity firm would pay $35.05 per share, according to the company. The acquisition, which was announced this morning, is expected to be completed in the third quarter, subject to shareholder approval and customary closing conditions.

ExamWorks has $500 million outstanding of 5.625% notes due 2023. That deal priced in April 2015 via a Bank of America Merrill Lynch–led bookrunner group with proceeds earmarked to refinance existing debt. The B–/B3 notes changed hands last week in a 103.25-103.5 context, trade data shows.

Atlanta, Ga.–based ExamWorks is a provider of independent medical examinations, peer reviews, bill reviews, Medicare compliance, case-management, and other related services. The company recorded $140.7 million of adjusted EBITDA in 2015 on revenue of $819.6 million. Existing corporate ratings are B+/B2. — Jon Hemingway

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Littlejohn-backed Interior Specialists to acquire HD Supply unit

Interior Specialists, Inc. (ISI), a portfolio company of Littlejohn & Co., has agreed to buy the Interior Solutions unit of Nasdaq-listed HD Supply for an undisclosed amount. The transaction is expected to close in the second quarter, according to the company.

Further details regarding the transaction were not disclosed.

The acquired business, formerly known as Creative Touch Interiors, is a provider of design center management and installation services to homebuilders.

ISI last summer closed on a $74.3 million term loan to support another acquisition and to refinance existing debt. Garrison Investment Group was lead arranger on the transaction, and as of Dec. 31, BDC Garrison Capital was holding $10.2 million of a first-lien term loan due June 2020, priced at L+800 with a 1% floor. PennantPark Investment Corp. ($25.4 million) and PennantPark Floating Rate Capital ($6.8 million) are also in the loan.

Interior Specialists, based in Carlsbad, Calif., is a new construction interior finishing contractor that supplies and installs flooring, cabinetry, countertops, window coverings, and builder construction options, including appliances, to the residential and commercial builder trades. Littlejohn acquired ISI in 2014. — Jon Hemingway

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As Leveraged Loan Market Heats Up, ‘Opportunistic’ Deals Re-emerge

opportunistic leveraged loan issuance

With the U.S. leveraged loan market heating up after a frigid start to 2016, refinancing and recap activity has picked up after being practically non-existent in the institutional market in the first six weeks of the year, according to S&P Global Market Intelligence LCD.

In the month to date, arrangers have launched $4 billion of refinancings and $1.9 billion of dividend recapitalization deals, the majority of which comes from McGraw-Hill Global Education’s $1.305 billion deal. While that’s hardly robust versus volume from last spring, it’s a notable increase from the start of the year and late 2015, particularly on the dividend side of the equation. – Kerry Kantin

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Cannery Casino loans edge closer to par as Boyd to buy Vegas assets

Loans backing Cannery Casino edged closer to par on news that Boyd Gaming agreed to purchase the company’s Las Vegas assets for $230 million. The sale represents the remainder of the company’s assets—recall late last year Cannery entered into a revised deal to sell The Meadows Racetrack and Casino to Gaming & Leisure Properties—and with both asset sales, the company’s first- and second-lien loans are expected to be fully repaid, according to sources.

In turn, the first-lien term loan due 2018 (L+475, 1.25% LIBOR floor) is marked a half-point higher following the news, at 99.5/100, according to sources. The second-lien term loan due 2019 (L+1,075, 1.25% floor) moved up to a 99.5 bid, from 98.75 yesterday morning, according to sources.

The Las Vegas transaction, which was announced late yesterday, is expected to close in the third quarter. NYSE-listed Boyd said it expects to fund the transaction with cash on hand. Accounting for expected synergies and operating refinements, Boyd said it expects the Cannery assets to generate $32 million in EBITDA during its first year of ownership, which implies a purchase price multiple of about 7.2x.

As reported, privately held Cannery and GLPI in December entered into an amended agreement in which GLPI will acquire the Meadows property for $440 million. At the time, the companies said closing was expected in the second half of 2016, with an outside closing date of November 2016. Cannery Co-CEO William Paulos said all net proceeds would be used to reduce debt. (For additional details, see “Cannery Casino TLs quoted higher on news of amended asset-sale deal,” LCD News, Dec. 16, 2015.)

Cannery Casino is rated B–/Caa1. The issuer’s existing loans, an originally $385 million first-lien term loan and a $165 million second-lien term loan, date back to 2012, proceeds of which were used to refinance debt. Deutsche Bank is administrative agent. — Kerry Kantin

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Swift Energy emerges from Chapter 11

Swift Energy today emerged from Chapter 11, the company announced this morning, adding that it closed on a new $320 million senior secured credit facility in connection with the emergence.

As reported, proceeds of the exit facility were used to repay holders of the company’s prepetition $330 million RBL. The company did not provide further details of the exit facility.

As also reported, the Wilmington, Del., bankruptcy court overseeing the company’s Chapter 11 confirmed the company’s reorganization plan on March 30.

Under the plan, senior notes will be exchanged for about 96% of the reorganized company’s equity, subject to dilution on account of the equitization of the company’s $75 million DIP facility via a rights offering.

According to court documents, the DIP equitization will dilute the distribution to senior noteholders by 75%. Consequently, after giving effect to the rights offering backstop fee of 7.5% of the equity, the final equity distribution to noteholders on account of their claims will be 22.1%, resulting in a recovery rate of 4.6–12.8%, depending upon plan equity value.

At a midpoint value of $680 million, court documents show, the senior notes recovery rate stands at 8.7%.

Existing equityholders retained 4% of the reorganized company’s equity, subject only to a proposed new management-incentive program. In addition, existing equityholders are also to receive warrants for up to 30% of the post-petition equity exercisable upon the company reaching certain benchmarks. — Alan Zimmerman

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US Leveraged Loans Gain 0.12% on Friday; YTD Return Hits 3.17%

Loans gained 0.12% on Friday after gaining 0.22% Thursday, ending an impressive weekly run, according to the LCD Daily Loan Index.

The S&P/LSTA US Leveraged Loan 100, which tracks the 100 largest loans in the broader Index, gained 0.11% Friday.

In the year to date, loans overall have gained 3.17%.


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This story first appeared on www.lcdcomps.com, 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.