Panter joins Oak Hill as portfolio manager

Lucy Panter has started a new role at Oak Hill Advisors, according to market sources. She has joined as a portfolio manager in the performing loan business, and her hire comes as part of Oak Hill’s drive to beef up its business lines across the board.

Panter was previously a portfolio manager at GoldenTree Asset Management, responsible for overseeing the firm’s European CLO business, and also covered the firm’s European consumer, retail, and leisure investments.

Prior to joining GoldenTree in September 2005, Panter held positions at P. Schoenfeld Asset Management, and at Goldman Sachs in New York. – Sarah Husband

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Merrill Corp adds leverage test to $510M loan refinancing

Credit Suisse and BMO Capital are adding a net total leverage test to their refinancing for Merrill Corp., sources said. Price talk and the Wednesday, May 27 deadline are unchanged.

The issuer plans a $510 million, seven-year covenant-lite term loan, talked at L+475, with a 1% LIBOR floor, at 99, to refinance its existing $364 million term loan and $225 million of holdco notes. The refinancing will close concurrently with an asset sale that would result in a debt repayment. Pro forma leverage is 4.1x, sources noted. Current leverage is 4.2x.

The term loan will include 12 months of 101 soft call protection, according to sources. At current talk, the loan would yield roughly 6.07% to maturity.

The issuer is rated B+/B2. The loan is rated BB-/B2, with a 2 recovery rating. The issuer also will place a $50 million revolver.

Merrill in March 2013 refinanced its first-lien debt as part of an out-of-court restructuring in which second-lien lenders received a combination of equity in the restructured company and the pay-in-kind holdco debt. Opco leverage has fallen to 2.6x today, from 3.4x as of March 2013, sources noted. The existing loan has a maintenance covenant.

Merrill Corp. is a global provider of customized communications services for regulated industries including banking, capital markets, insurance, legal, healthcare, energy, and other corporate markets, helping clients address confidentiality and regulatory issues. The sale of its Legal Solutions business allows Merrill to focus on its existing core businesses which had superior revenue growth, margin profile, cash-flow generation and ROI and improves the strategic overlap of the existing businesses, sources said. Additionally, it will facilitate the transition to a single, integrated sales force, streamline shared services, and reduce overall operating costs, while enhancing the credit profile of the business, they added. – Chris Donnelly


HSBC hires Morrish and Heath for loans trading team

Grieg Morrish and Mark Heath have left BNP Paribas and Commerzbank, respectively to join HSBC’s loan trading team. Both will be joining late summer.

Morrish, who will be a crossover loans trader at HSBC, joins from BNP Paribas’s secondary loans trading team. Morrish left his post at Invesco in 2011 to move to BNP Paribas. Heath was previously a senior loan trader at Commerzbank, and will be joining HSBC as a par loan trader. – Nina Flitman


Altice buys 70% of Suddenlink; new debt financing to be raised

Altice has announced that it will acquire 70% of Suddenlink from BC Partners, CPP Investment Board and Suddenlink management, with BC Partners and CPP Investment Board retaining a 30% stake. The purchase values Suddenlink at an enterprise value of $9.1 billion and 7.6x synergy-adjusted EBITDA. J.P. Morgan, PJT Partners and BNP Paribas acted as financial advisors to Altice.

The transaction is to be financed with $6.7 billion of new and existing debt at Suddenlink, a $500 million vendor loan note from BC Partners and CPP Investment Board, and $1.2 billion of cash from Altice. Market sources suggest that given the size of the debt raise, loan and bond issuance on both sides of the Atlantic is a distinct possibility.

The transaction is expected to close in the fourth quarter of 2015 once applicable regulatory approvals have been obtained.

Altice S.A. (holdco) bonds are underperforming on the news while Altice International bonds are largely stable. The 7.25% and 6.25% euro-denominated notes due 2022 and 2025 are both down a point, at 104.25 and 99.75, respectively, while the 7.7% dollar-denominated notes due 2022 are indicated down 75 bps, at 102.25.

This will be Altice’s third jumbo takeover in just over a year. Earlier this year it completed a roughly €6 billion cross-border loan-and-bond financing backing the purchase of the Portuguese assets of Portugal Telecom from Oi for a €7.4 billion enterprise value.

In April last year Numericable and Altice completed a $16.67 billion, seven-tranche, euro and U.S. dollar offering that shattered records to become the largest bond deal on record, along with $5.2 billion in Numericable loans. The offerings were part of a multi-pronged M&A-related recapitalization under which Numericable purchased telecom firm SFR from Vivendi.

Suddenlink is the 7th largest U.S. cable operator with 1.5 million residential and 90,000 business customers, primarily focused in Texas, West Virginia, Louisiana, Arkansas and Arizona. In 2014, Suddenlink generated revenue of $2.3 billion and EBITDA of more than $900 million. – Luke Millar


Capital Southwest affiliate to buy Strathmore Products with $70M loan

Capital Southwest, a BDC whose shares trade as CSWC on Nasdaq, announced it would buy Strathmore Products through an affiliate using a $70 million term loan.

Lenders are J.P. Morgan Chase, SunTrust Bank, Comerica Bank, and Amegy Bank, an SEC filing today showed.

The assets were acquired through the Whitmore Manufacturing Company, a subsidiary of Capital Southwest. The acquisition provides an opportunity for further acquisitions in industrial coatings.

Strathmore Products, based in Syracuse, N.Y., manufactures specialty industrial coatings such as urethanes, epoxies, acrylics, and alkyds used for rail, power generation, oil and gas, and other industrial uses.

Dallas-based Capital Southwest is a BDC that invests in controlling and minority stakes of private companies with assets of $750 million.

In December, Capital Southwest’s board approved a split of the company, creating a lender that will target middle-market companies in the Southwestern U.S.. The spin-off will create two publicly traded entities, an internally-managed BDC and a diversified growth company called Industrial Co., including Whitmore.

The spin-off is due to be completed by the end of the third quarter. – Abby Latour

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


Leveraged loans: Endo nets debt commitment backing $8B Par Pharmaceutical buy

Deutsche Bank and Barclays are providing debt financing to back Endo International’s $8.05 billion purchase of Par Pharmaceutical from TPG, which was announced earlier today.

The purchase price will consist of approximately 18 million shares of Endo equity (or roughly $1.55 billion of value based on the 10-day volume weighted average share price of Endo ending on May 15, 2015) and $6.5 billion in cash that would be a mix of cash, term debt, bonds, and an equity offering of roughly $1.5-2 billion.

The transaction creates a specialty pharmaceutical company with a top-five generics business as measured by U.S. sales and 2014 pro forma revenue of $4.2 billion. Endo sees $175 million of operational and tax synergies. The issuer estimates it would deleverage to a projected 3-4x in 12-18 months.

Par Pharmaceutical tapped the loan market earlier this year for a $425 million incremental B-3 term loan that was used along with cash to fund a $535 million dividend to TPG. The issuer also has in place a $1.45 billion TLB-2 due September 2019.

Endo’s roughly $5.4 billion debt stack includes a roughly $420 million TLB due 2021 and a roughly $1.06 billion TLA due 2019. – Chris Donnelly


Golub hires Cushman from GE Antares for middle market origination

Golub Capital has hired Chip Cushman from GE Antares to originate middle market loans.

Cushman will cover the New York metro and D.C. metro areas and be based in New York. He joins as a managing director.

At GE Antares, Cushman was responsible for developing relationships with private equity firms and originating new loans.

At the same time, Golub Capital announced that Matt Fulk and Craig Palmer would assume new roles in origination, from underwriting.

“Stepping into their new business development roles will further support Golub Capital’s intention to increase its client base,” a May 15 statement from Golub said.

GE announced in April it would divest GE Capital, including its $16 billion sponsor finance business. GE Antares specializes in middle market lending to private-equity backed transactions. – Abby Latour


After credit downgrades, McDonald’s markets bond deal

On the heels of downgrades across all three ratings agencies, McDonald’s (NYSE: MCD) is in market today with a benchmark offering of SEC-registered senior notes across five-, 10-, and 30-year issues via bookrunners BAML, Goldman Sachs, J.P. Morgan, and Morgan Stanley, sources said. The U.S. dollar deal was announced as the quick-service restauranteur concurrently placed €2 billion of intermediate notes overseas.

Initial whispers for today’s U.S. dollar offering were reported in the areas of T+80, T+120, and T+170, respectively. For reference, the issuer last June placed $500 million of 3.25% 10-year notes due June 10, 2024 at T+67, and the issue changed hands earlier this month at wider date-adjusted levels near T+90.

On April 29, 2014, McDonald’s inked a $500 million, “no-grow” offering of 3.625% bonds due May 2043 at T+83. That issue changed hands last week at date-adjusted levels in the low T+140s, and in the low T+150s this morning.

McDonald’s recently named a new CEO amid slumping sales trends and tension with franchisees, and the new officer quickly announced plans to refranchise materially more company-owned restaurants under a simplified menu offering, while pulling forward direct returns to shareholders to this year.

Ratings agencies responded to the capital-return plan earlier this month with downgrades to A-/A3/BBB+, from A/A2/A. Outlooks are stable at the lower ratings.

“The return to shareholders of about $8.5 billion this year will necessitate higher leverage than we forecast and represents a more aggressive shift toward shareholders returns than we previously assumed,” S&P stated on May 4. “While we see credit and cash flow benefits from refranchising, lower capital spending and cost reductions, these are largely offset by our current assumption that absent specifics on longer term financial policy, the company will return much of this cash to shareholders and credit measures will not return to the low-2x area.”

A year ago, McDonald’s announced plans to return $18-20 billion to shareholders through 2016 via share repurchases and dividends. For reference, bought back roughly $3.4 billion of its shares over the 12 months through March this year, up from $1.9 billion over the year-earlier period, while paying out more than $3.2 billion of dividends over the latest 12-month period, according to S&P Capital IQ.

The company’s share buybacks peaked at $5.2 billion over the 12 months ahead of the collapse of Lehman Brothers in September 2008, filings show. – John Atkins


Burger King reigns in HY bonds during busiest week in 6 months

Sixteen issuers waded into the high-yield bond market this week, for the busiest period by number of deals in six months. The largest deal was restaurant chain Burger King/Tim Hortons, which issued $1.25 billion of bonds to refinance other debt.

It was the busiest week since Nov. 17, 2014 by number of deals, though not the highest by volume. Volume for the week is expected at $8.915 billion, short of last week’s $9.475 billion.

US high yield bond volume May 2015

Besides Burger King/Tim Hortons, the largest deals of the week were electricity generator PPL Energy Supply, insurer CNO Financial Group, Black and Decker toolmaker Spectrum Brands, car loan provider Ally Financial, and Energizer Holdings. Most of them were for debt repayment.

Energizer was an exception. The company, which trades on the New York Stock Exchange under the ticker symbol ENR, sold $600 million of 10-year notes to fund a spinoff of its Household Products business, as announced in April 2014. The company manages business in two units: personal care, which includes shaving and infant care, and household products, which includes batteries and flashlights.

The new bonds this week are brought by Energizer SpinCo (New Energizer), the recently formed holding company for the Household Products business of Energizer Holdings, with proceeds being used by Energizer Holdings (ParentCo) to fund the tax-free spin-off of the business. As part of the deal, ParentCo will be renamed Edgewell Personal Care Company, and New Energizer will be renamed Energizer Holdings, Inc., according to filings.

By rating, the junk bonds issued this week were concentrated as single- and double-B rated issues. However, insurance broker NFP Corp. and HRG Group, the holding company previously known as Harbinger Group, priced lower-rated triple-C offerings. Notably, Spectrum Brands, the Wisconsin-based company whose products range from Rayovac batteries to Cutter-branded mosquito repellent, received an investment by HRG Group this week with proceeds from its $300 million, two-part offering.

Interestingly, issuers continue to have success placing longer-dated 10-year offerings, despite ongoing volatility in Treasury and equity markets, and growing investor caution toward longer-dated bonds.

The surge in high-yield issuance comes alongside a rush by higher-rated counterparts to sell bonds before underlying interest rates rise more. In the high-grade market, companies have been rushing to issue bonds as Treasury yields march higher. The yield on the 10-year Treasury is 2.14% today, after touching 2.35% on May 12, versus 1.90% on April 15.

This week, 10-year bonds were sold by CNO Financial Group, PPL Energy Supply, Spectrum Brands, Energizer Holdings, andFelcor Lodging, which is a publicly traded REIT whose properties include the Knickerbocker Hotel in New York.

Last week, 10-year bonds were sold by drug clinical trial provider Quintiles Transnational, aircraft component supplierTransDigm, and oil-and-gas producers Range Resources and SM Energy. The bookrunners on Quintiles marketed the 10-year tranche in terms of spread, not yield, investor sources say.

Demand was strong for the marquee high-yield bond offering this week, Burger King’s issue of secured notes due 2022. J.P. Morgan led the deal. Talk emerged in the 4.75% area, slightly inside of 4.75-5% whispers, and sources relay that the order book reached north of $4 billion. Proceeds, along with cash on hand, will be used to repay roughly $1.5 billion of bank debt. The bonds priced at par to yield 4.625%.

The issuer of the debt, Restaurant Brands International, trades on the New York Stock Exchange under the ticker QSR with an approximate market capitalization of $19.5 billion.

Restaurant Brands was created in December 2014 through the merger of Burger King Worldwide and Canadian coffee and breakfast chain Tim Hortons, with over 19,000 restaurants in 100 countries and U.S. territories. Warren Buffet’s Berkshire Hathaway acquired $3 billion of preferred shares in the transaction.

Burger King is no stranger to the junk bond market. In September 2014, Burger King issued $2.25 billion offering of second-lien secured notes yielding 6% to fund the acquisition of Tim Hortons.

The new Burger King bonds stayed in demand as they began trading in the secondary market. They were quoted steady today, at 100/100.5. Buying interest also remained for other new issues.

Ally Financial, whose ratings are both junk and low-tier investment grade, were also bid higher. The 3.6% notes due 2018 that were sold at 99.44, to yield 3.8%, gained from those levels to a 100 mid-point, sources said. Ally 4.625% notes due 2022 were sold at 98.39, to yield 4.9%, and traded as high as par earlier today, trade data showed. – Joy Ferguson/Matt Fuller


InMotion receives financing from Fifth Street for acquisition

Fifth Street Finance Corp. provided the debt financing that supported the acquisition of Airport Wireless Holdings by InMotion Entertainment Group, a portfolio company of private equity firms Bruckmann, Rosser, Sherrill & Co. and Palladin Consumer Retail Partners. No further details about the financing were available.

Airport Wireless is an airport-based retailer of consumer electronics and accessories that operates under Airport Wireless, techshowcase, Tech Interaction, tech in a sec, and Touch Table.

InMotion was formed late in 2013 when BRS and Palladin acquired the assets of Project Horizon from Gate Petroleum Company. Fifth Street Finance was lead arranger and agent on a $48.2 million unitranche financing for the buyout, and also co-invested in the deal. That term loan due October 2018 for InMotion priced at L+775 with a 1.25% floor, SEC filings show.

InMotion Entertainment Group, based in Jacksonville, Fla., is an airport-based retailer. With the acquisition, the company operates 120 locations in airports across the U.S. under the InMotion Entertainment, Soundbalance, and Headphone Hub banners. – Jon Hemingway