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Loan fund inflow streak snapped at 95 weeks

For the first time since June 2013 retail-cash outflows were logged from bank loan mutual funds and exchange-traded funds as $249 million was pulled in the week ended April 16, according to Lipper.

To be sure, the outflow was not unexpected and inflows over the previous four weeks had dwindled steadily to just positive $48 million last week, a 75-week low. For the record, as outflows go, this week’s was also the largest since October 2011.

With this result the four-week trailing average slumps to positive $46 million, from positive $190 million last week, and $321 million in the week prior. Of this week’s total outflow, 9% was tied to the ETF segment.

The streak of retail cash inflows into loan funds ran 95 weeks, for a total of $66.7 billion over that span, by the weekly reporters only.

Year-to-date inflows total $6.7 billion, of which $1.06 billion is ETF-related, or 16% of the sum. In the comparable year-ago period, inflows were $14.1 billion, with 12% tied to ETFs.

The change due to market conditions was negative $190 million. Total assets stood at $109.1 billion at the end of the observation period, with ETFs comprising $8.4 billion of the total, or approximately 8%. – Jon Hemingway

LL4.16-650

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NXT Capital prices $357M CLO via Wells Fargo; AAAs at 175 bps; 19th deal in April

Wells Fargo today priced a $357.4 million CLO for NXT Capital, according to market sources. BMO was a co-lead for the transaction.

The CLO is structured as follows:

The transaction has a two-year non-call period, and a four-year reinvestment period.

Including NXT’s CLO issuance totals $32.77 billion across 64 deals, according to LCD. In April, 19 deals have priced totaling $10.13 billion. – Sarah Husband

 

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AFA Foods (“pink slime” producer) exits Chapter 11; estate seeks $84M in clawbacks

The Chapter 11 liquidation plan for AFA Foods took effect on Wednesday, court records show, following bankruptcy court confirmation of the company’s plan on March 7.

U.S. Bankruptcy Judge Mary Walrath approved a global settlement resolving all key disputes remaining in the case last July. Lawyers for the bankrupt estate are now attempting to claw back about $84 million for creditors. AFA’s estate recently filed 125 suits seeking to recover allegedly preferential payments made to vendors and other parties in the weeks leading up to the company’s April 2012 bankruptcy filing, according to Law360.

Although the gross amount sought by the suits is about $84 million, the net value to creditors will likely be in the $15 million range due to the offset rights of some of the targets, Law360 reported.

AFA repaid its senior lenders last year after selling its meat-processing facilities, which brought in a total of $69.7 million. The company was left with about $14 million in cash on hand after repaying its $56 million debtor-in-possession credit facility.

AFA filed for Chapter 11 in April 2012, in the wake of negative media reports on one of its primary products, a lean, finely-textured processed beef often added to ground beef and known pejoratively as “pink slime.” The ground-beef processing company, based in King of Prussia, Pa., blamed its filing on “recent changes in the market for its ground-beef products and the impact of media coverage related to boneless lean beef trimmings.”

AFA became the subject of media scrutiny as early as 2009, when its facility in Ashville, N.Y., recalled more than 500,000 pounds of ground beef after it was linked to an outbreak of E. coli that killed two people and sickened about 500 others, according to The New York Times. The beef trimmings commonly used to make ground beef are more susceptible to contamination because E. coli thrives in cattle feces that can get smeared on the surfaces of whole cuts of meat, the newspaper reported.

The company faced another blow in March of 2012 when a series of reports by ABC News criticized boneless lean beef trimmings, also referred to as “pink slime,” which ABC said is added to 70% of ground beef sold in U.S. supermarkets. “Once only used in dog food and cooking oil, the trimmings are now sprayed with ammonia so they are safe to eat and added to most ground beef as a cheaper filler,” ABC News said. Still, the product meets federal food-safety standards and has been used for years, according to the Associated Press.

In the wake of the report, large grocery-store chains like Kroger pulled the product from their shelves.

Jones Day, Imperial Capital, and FTI Consulting advised AFA in its restructuring. – John Bringardner

 

 

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Avago $4.6B loan backing LSI acquisition enters secondary north of issue price

avago-technologies_200x200Accounts this afternoon received allocations of the covenant-lite $4.6 billion B term loan for Avago Technologies, which broke for trading at 100/100.5, from issuance at 99.5, according to sources. The seven-year loan is priced at L+300, with a 0.75% LIBOR floor. Deutsche Bank, Barclays, Bank of America Merrill Lynch, and Citigroup arranged the loan, which cleared tight to original talk. The publicly traded semiconductor manufacturer will use proceeds to support its $6.6 billion acquisition of LSI Corp. The senior secured financing also includes a $500 million revolver, while Avago is also planning to fund the deal with a $1 billion investment from Silver Lake Partners, which would be in the form of a seven-year 2% convertible note, with a conversion price of $48.04 per share or preferred stock. The company will also use $1 billion of cash from the combined balance sheet to fund the transaction. Terms:

Borrower Avago Technologies
Issue $4.6 billion B term loan
UoP Fund acquisition of LSI
Spread L+300
LIBOR floor 0.75%
Price 99.5
Tenor seven years
YTM (once funded) 3.89%
Call protection 12 months 101 soft call
Corporate ratings BB+/Ba2/BB+
Facility ratings BBB-/Ba1/BBB-
S&P recovery rating 2
Financial covenants none
Arrangers DB, Barc, BAML, Citi
Admin agent DB
Price talk L+325/0.75%/99
Notes Ticking fee of 150 bps kicks in on June 1, stepping to 300 bps July 1; includes a 24-month MFN sunset provision
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YouTube video: April 2014 European leveraged loan market analysis

LCD’s video analysis detailing the European leveraged loan market during March and 2014′s first quarter is now on YouTube.

Of note is the imbalance created by thin supply and vigorous demand, which is causing conditions in the market to become increasingly issuer-friendly. The loan market definitely felt livelier in terms of new issuance, with a mix of new buyouts and opportunistic refinancing and repricing activity coming over the horizon. The elephant in the waiting room is Numericable, which has lined up a huge covenant-lite M&A financing to back its bid for SFR.

This month LCD looks at:

  • Annual senior loan volume
  • Annual arbitrage CLO volume
  • Average TLB primary spread and yield to maturity
  • Annual pro forma debt/EBITDA ratios of LBOs
  • Quarterly Index returns (excluding currency)
  • Forward pipeline volume as of April 4, 2014


The video is available here.

Click here to download PDF slides of the video on Slideshare.

While you’re on YouTube please subscribe to LCD’s YouTube Channel. That way you’ll be certain not to miss any LCD videos. You can also subscribe by clicking on the link to the right of any LCD News email, or here:

http://www.youtube.com/user/LCDcomps

If you’d like to embed any LCD video on a web page or in other digital media, it’s simple via the “embed” button on the YouTube page for the video. You can also embed the slides via Slideshare.

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Men’s Wearhouse $1.1B loan backing Jos A Bank buy rises on entering secondary

menswearhouseThe $1.1 billion covenant-lite term loan for Men’s Wearhouse ticked to 99.625/100.125 after breaking secondary late this afternoon at 99.5/100, from issuance at 99, according to sources. The seven-year loan is priced at L+350, with a 1% LIBOR floor. J.P. Morgan and Bank of America Merrill Lynch arranged the deal, which cleared at the tight end of talk. Proceeds back the publicly traded retailer’s planned $1.8 billion acquisition of Jos. A. Bank. Since the deal isn’t expected to close until the third quarter, lenders will be paid a ticking fee of half of the drawn spread beginning in June; the fee steps up to the full drawn spread in July. The issuer is also putting in place a $500 million, five-year asset-based revolver. The financing for the merger is also expected to include a $600 million issue of unsecured notes, which have been bridged, SEC filings show. BAML is expected to be left lead on the bond deal. Terms:

Borrower Men’s Wearhouse
Issue $1.1 billion delayed-draw TLB
UoP Finance acquisition of Jos. A. Bank
Spread L+350
LIBOR floor 1.00%
Price 99
Tenor seven years
YTM 4.76%
Call protection 12 months 101 soft call
Corporate ratings B+/Ba3
Facility ratings B+/Ba2
S&P recovery rating 3
Financial covenants none
Arrangers JPM, BAML
Admin agent JPM
Price talk L+350-375/1%/99
Notes Ticking fee of 175 bps kick