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First Data seeks loan amendment, new five-year revolver

First Data has approached its lenders for an amendment that would make a host of investor-friendly changes to its credit agreement as the issuer seeks to put in place a new five-year revolver, according to sources.

The credit card processing firm is seeking to put in place a revolver of up to $1.25 billion, which would replace its existing $1.016 billion revolver ahead of its September 2016 maturity. Pricing on the new facility is outlined as L+350, which is the same coupon as the bulk of the issuer’s term debt, but compares with L+400 on the existing RC, sources noted.

Consents are due by noon EDT on Thursday for the amendment request. There is no fee on offer.

For reference, the loan is governed by a senior secured leverage covenant. Leverage per the covenant was 4.03x at the end of the first quarter, versus a 6x covenant, SEC filings show.

Credit Suisse is administrative agent.

First Data last tapped the loan market in July for a repricing of its term loans maturing in March and September 2018 and for a $350 million tack-on to its dollar-denominated term loan due March 2018. Via the transaction, the issuer reduced pricing to L/E+350, from L/E+400. Proceeds from the incremental debt were earmarked to help refinance PIK-holdco notes and place cash on the balance sheet. Recall the company last year used proceeds from a $3.5 billion equity raise to refinance bonds.

Note the company’s term loan due March 2017 is also priced at L+350, while the term loan due March 2021 is priced at L+400.

First Data, which is controlled by KKR, is rated B/B3. The existing loans are rated B+/B1, with a 1 recovery rating from S&P. –Kerry Kantin

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BlueArc Capital’s buyout of Brunswick Bowling financed by Gladstone

Gladstone Investment Corporation provided debt for a buyout of Brunswick Bowling Products by BlueArc Capital Management.

Gladstone Investment provided equity and secured debt. Capitala Finance was also part of the transaction.

Brunswick Corp. was the seller. Last year, Brunswick completed a sale of its retail bowling centers to Bowlmor AMF. Proceeds from both sales are expected to range from $270-290 million, depending on tax and liabilities.

BlueArc Capital Management, based in Atlanta, is a private investment firm.

Brunswick Corp., based in Lake Forest, Ill., targets growth investments and acquisitions in the marine and fitness segments. Brands include Mercury and Mariner outboard engines; Life Fitness and Hammer Strength fitness equipment; and Brunswick billiards tables and table tennis.

Gladstone Investment Corporation, a BDC that trades on Nasdaq under the symbol GAIN, invests in debt and equity of small- and mid-size businesses. – Abby Latour

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Gladstone Capital adds GFRC Cladding Systems loan to non-accrual

Gladstone Capital added GFRC Cladding Systems to non-accrual status in the quarter ended March 31, citing declining operation performance.

The investment comprised a $4.9 million 10.5% first-lien debt due 2016, marked under one million at fair value as of March 31; $6.6 million of second-lien debt due 2016, marked at $1.9 million at fair value; and a line of credit, a Ma y 6 10-Q filing showed.

GFRC Cladding Systems designs and manufactures glass-fiber-reinforced concrete panels for commercial construction projects greater than four stories in height. It is a portfolio company of Dallas-based middle-market private equity firm Transition Capital Partners.

The other two companies on non-accrual status in the recent quarter were Sunshine Media and Heartland Communications.

Some tranches of the investment in Sunshine Media were moved to accrual status in the quarter as a result of improving profitability and liquidity.

The investment in Sunshine Media comprised first-lien debt, a line of credit, and equity. Sunshine Media, based in Chattanooga, Tenn., publishes local business-to-business custom publications with titles such asBuilder/ArchitectDoctor of Dentistry, and MD News.

The investment in Heartland Communications comprised a $4.3 million 5% term loan due 2014, a line of credit, and equity. Heartland Communications, based in Appleton, Wis., operates AM and FM radio stations in Park Falls, Eagle River, and Ashland, Wis.; and Iron River and Houghton, Mich.

As of March 31, 2015, debt of three portfolio companies on non-accrual status totaled $39.2 million on a cost basis, or 10.2% of all debt investments, and $9.2 million, or 2.8% at fair value.

As of Dec. 31, 2014, non-accrual debt on a cost basis totaled $33.6 million over two portfolio companies, or 9.4%, and $8.3 million, or 2.8%, at fair value.

Gladstone Capital, which trades on Nasdaq under the symbol GLAD, is an externally managed BDC that invests in debt and equity of small and midsize U.S. businesses. – Abby Latour

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Apax Partners to launch listed fund investing in equity and debt

Private equity group Apax Partners is to launch a listed investment vehicle that will invest in public and private debt, as well in private equity deals backed by its traditional buyout funds.

Apax Global Alpha (AGA) is hoping to raise €250 million when it debuts on the LSE next month. It has already secured commitments from a group of cornerstone investors totalling €135 million so far, Apax said.

The fund will aim to invest in private equity investments made by Apax funds, as well as committing capital to the funds themselves. It will also invest in public and private debt opportunities derived through Apax’s insights from its private equity activities, which Apax calls “derived investments”. Once fully invested, the fund will aim to be equally invested between private equity and derived investments. Debt investments will include sub-investment grade and unrated debt instruments, Apax said.

Prior to admission, the fund will acquire PCV Lux, a fund formed in 2008 as an investment vehicle for Apax employees. PCV’s NAV as of March 31, 2015 stood at €611.1 million, and PCV’s assets include investments in and commitments to four Apax buyout funds, as well as investments in debt and equities.

The fund is targeting an annualised total shareholder return of 12-15% (net of fees and expenses), including a dividend yield of 5% of NAV once fully invested. – Oliver Smiddy

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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

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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

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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

 

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Camping World sets lender call for repricing, $95M add-on loan

Goldman Sachs is holding a lender call on Monday to launch a repricing and $95 million add-on term loan for Camping World, sources said. Proceeds of the add-on would fund a dividend.

Good Sam Enterprises, formerly known as Affinity Group, is a provider of membership clubs, as well as subscription-based products, services, and publications, targeted toward recreational vehicle and other outdoor enthusiasts in the U.S.

Additionally, the company owns Camping World, the nation’s largest retailer of RV supplies, accessories, services, and new and used RVs. The company is 97% owned by private equity investor Stephen Adams. – Staff reports

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Gehl Foods nets $161.5M from SSLP for Wind Point buyout

GE Capital and Ares Capital were joint lead arrangers and joint bookrunners on a $161.5 million senior secured term loan that closed in the first quarter to finance the acquisition of privately held Gehl Foods by Wind Point Partners. The loan was provided via the Senior Secured Loan Program (SSLP).

As of March 31, the SSLP’s portfolio holdings listed a loan for Gehl due March 2021, with an interest rate of 7.5%, according to the latest 10-Q filing for Ares Capital.

Gehl Foods, based in Germantown, Wis., is a maker of ready-to-serve, real dairy products. The company uses an advanced aseptic process to eliminate microorganisms that cause dairy foods to spoil and at the same time locks in freshness and taste. Gehl recorded sales of nearly $250 million in 2014, according to the company. – Jon Hemingway

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American Capital says it now plans to form one new BDC, not two

American Capital has revised a plan to split the company into three parts, saying it will now form only one new BDC, instead of two.

The new BDC, known as American Capital Income, will have $4 billion of equity capital at close and will comprise most of American Capital’s existing investment assets. The earlier plan, announced in November, was for two BDCs, one allocated $3 billion of equity and the other $1 billion.

“By concentrating capital in one larger BDC and utilizing our established Sponsor Finance business, American Capital Income will be able to lead and syndicate upper middle market unitranche and second lien sponsor finance transactions, underwriting up to $300 million, while generally holding up to $150 million. This should allow American Capital Income to originate substantially more sponsor finance volume than American Capital has in its past, while enhancing credit by lending to larger and more established businesses,” American Capital said in a statement.

Last year, American Capital originated $689 million in sponsor-finance deals.

American Capital and other lenders to private equity-backed companies are positioning themselves to take market share from traditional market leader, GE Capital after General Electric announced in April that it plans to divest GE Capital, including its $16 billion sponsor finance business. Uncertainty over the GE Capital sale is expected to open the market to competitors.

The spin-off of American Capital Income will be through a tax-free dividend to shareholders.

American Capital shareholders need to approve the transaction, including American Capital’s election to no longer be regulated as a BDC. American Capital will continue as a publicly traded asset management business. – Abby Latour

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