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US Leveraged Loan Funds See $125M Investor Cash Inflow

loan fund flows

U.S. leveraged loan funds recorded an inflow of $125.4 million in the week ended Aug. 17, according to the Lipper weekly reporters only. This is the third straight week of increasing inflows to the asset class, following last week’s $96.4 million and $60.4 million in the week prior.

The reading was 37% attributable to the ETF segment, up from 20% of last week’s reading.

The trailing four-week average rose to $66.7 million, from $52.6 million last week, amid the increasing inflow.

Year-to-date outflows from leveraged loan funds now total $5.11 billion, based on outflows of $5.9 billion from mutual funds against inflows of $779 million to ETFs, or inverse 15%, according to Lipper.

The change due to market conditions this past week was positive $40.2 million, a negligible change against total assets, which were $59.2 billion at the end of the observation period. ETFs represent about 11% of the total, at $6.6 billion. — Jon Hemingway

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loanDepot Nets $150M in New Term Debt to Back Growth Plans

loanDepotIrvine, Calif.-based loanDepot announced yesterday that it has received $150 million in term debt financing to back technology and product development and leverage its balance sheet to hold certain loan assets.

The non-bank consumer lender had planned to go public last November, but the IPO was postponed. At that time, loanDepot disclosed it had an $80 million unsecured term loan outstanding with pricing of 11–12.75%, $15 million in subordinated notes priced at 15%, a $30 million revolver backing working capital, and a $150 million secured credit facility that served as a warehouse line.

The company, launched in 2010, has 5,200 employees and operates eight business centers and more than 150 loan stores across the U.S. Parthenon Capital sponsors the business.

The company said today that its second-quarter fundings reached nearly $10 billion in home, personal, and home equity loans, up 16% compared to the same time last year. — Kelly Thompson

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US Leveraged Loans Gain Another 0.02% Today; YTD Return: 6.41%

Loans gained 0.02% today after gaining 0.02% yesterday, 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, was unchanged today.

In the year to date, loans overall have gained 6.41%.

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Chesapeake Energy Upsizes Leveraged Loan by $500M, Tightens Interest Rate

Joint bookrunners Goldman Sachs, Citi, and MUFG have upsized Chesapeake Energy’s first-lien, last-out term loan to $1.5 billion, from $1 billion, and tightened pricing, according to market sources. Pricing was expected later today.

Price talk for the five-year loan is now L+750 with a 1% LIBOR floor, offered at par. Recall initial guidance including a spread range of L+750–775 and an OID of 99. The loan is non-callable for two years, with a first call at par plus 50% of the coupon, stepping to 25% and par.

chesapeake energy logoProceeds from the deal will be used to fund a tender offer for up to $500 million of the borrower’s outstanding bonds in terms of purchase price. The tender prioritizes the company’s shortest-dated bonds. It will redeem up to $400 million (purchase price) of its 6.35% euro senior notes due 2017, 6.5% senior notes due 2017, and 7.25% senior notes due 2018.

Up to $250 million will be spent on the second-priority floating-rate senior notes due 2019 and the third-priority notes, which comprise the following paper: 6.625% senior notes due 2020; 6.875% senior notes due 2020; 6.125% senior notes due 2021; 5.375% senior notes due 2021; 4.875% senior notes due 2022; and 5.75% senior notes due 2023.

The new debt will be secured against the same collateral that is tied to the company’s revolver. In case of default, payments to new term loan creditors will waterfall down after the revolver is repaid. The loan will carry an unconditional guarantee from Chesapeake’s directly and indirectly held wholly owned domestic subsidiaries, with the same guarantee in place for the revolving credit.

Agencies assigned issue ratings of B–/Caa1 and the recovery rating from S&P Global Ratings is 1. S&P Global also downgraded the corporate rating to CC, from CCC. Moody’s affirmed the corporate rating at Caa2. Outlooks are negative and positive, respectively. — Jon Hemingway/Rachel McGovern

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Marketo’s $1.79B Take-Private Purchase Backed by Debt from Golub

Golub Capital punched upmarket to provide the debt financing behind the $1.79 billion take-private purchase of San Mateo-based digital-marketing company Marketo (NASDAQ:MKTO) by Vista Equity Partners.

The purchase closed today after shareholders approved the agreement on July 28, Marketo announced this morning.

Wilson Sonsini Goodrich & Rosati served as legal advisor to Marketo. Kirkland & Ellis LLP served as legal advisor to Vista. —Kelly Thompson

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US Leveraged Loans Gain 0.02% Today; YTD Return: 6.37%

Loans gained 0.02% today after going unchanged on Friday, 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 0.04% today.

In the year to date, loans overall have gained 6.37%.

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Chesapeake Energy Launches $1B Leveraged Loan Backing Bond Tender Offer

Chesapeake Energy has launched a $1 billion first lien, last-out loan to syndication. Goldman Sachs (left lead), Citi, and MUFG are joint bookrunners on the transaction.

The five-year deal is expected to price in the middle of this week, and the proceeds will be used to finance a tender offer for up to $500 million of the borrower’s outstanding bonds in terms of purchase price.

chesapeake energy logoThe new debt will be secured against the same collateral that the company’s revolver is tied to. In case of default, payments to new term loan creditors will waterfall down after the revolver is repaid. The loan will carry an unconditional guarantee from Chesapeake’s direct and indirectly held wholly-owned domestic subsidiaries, with the same guarantee in place for the revolving credit facility.

The tender prioritizes the company’s shortest-dated bonds. It will redeem up to $400 million (purchase price) of its 6.35% euro senior notes due 2017, 6.5% senior notes due 2017, and 7.25% senior notes due 2018.

Up to $250 million will be spent on the second priority floating-rate senior notes due 2019 and the third priority notes, which comprise the following paper: 6.625% senior notes due 2020; 6.875% senior notes due 2020; 6.125% senior notes due 2021; 5.375% senior notes due 2021; 4.875% senior notes due 2022; and 5.75% senior notes due 2023. The full tender announcement can be found here.

The new facility and tender offer follows better-than-expected second-quarter earnings from the energy firm, which pushed some of its outstanding debt higher on Aug. 4. As reported, the 8% second-lien exchange notes due 2022 jumped two points to start the session, at 93/93.5, and were later quoted at 92/93, with trades at 92. The 6.625% unsecured notes due 2020 traded as high as 80 following the results, versus 77 before publication, trade data show. — Rachel McGovern

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KKR Capital Launches $300M Leveraged Loan Backing Epicor Buy

KKR Capital Markets has scheduled a lender call for today at noon EDT to launch a $300 million of incremental facilities for Epicor. The financing includes a $225 million non-fungible first-lien term loan alongside a $75 million second-lien term loan that has been preplaced, according to sources.

epicor logoAs reported, KKR is leaving Epicor’s existing loans in place as it acquires the software concern from Apax Partners. A $2.11 billion financing arranged last year by Jefferies, Macquarie, and Nomura included pre-cap language that would allow the loans to remain in place following the sale to a qualified sponsor.

The 2015 dividend recapitalization included a $1.4 billion covenant-lite first-lien term loan due 2022 (L+375, 1% LIBOR floor), a $100 million revolver due 2020, and $610 million of privately placed second-lien loans. That transaction leveraged Epicor at 5.1x first-lien and roughly 7.3x total.

Epicor is a global provider of business software for the manufacturing, distribution, retail, and services industries. — Staff reports

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US Leveraged Loans Gain 0.05% Today; YTD Return: 6.28%

Loans gained 0.05% today after gaining 0.06% yesterday, 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 0.07% today.

In the year to date, loans overall have gained 6.28%.

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Peabody DIP Lenders OK Business Plan that Will Serve as Reorganization Foundation

Peabody Energy said that its DIP lenders have approved the company’s proposed business plan, which the company said would “form the foundation” for a reorganization plan it expects to file by the end of the year.

peabody energy logoThe company said in a press release that over the five-year business plan period, the company contemplates total sales volumes rising from 168 million tons in 2016 to a range of 194–197 million tons per year between 2018 and 2021. It anticipates revenue will be largely stable between $4.4–4.6 billion, and expects EBITDAR to rise 60–65% from 2016 levels by the end of the plan period.

Operationally, the company said that within the U.S., its plan includes the company’s assets in the PRB and Illinois Basin, which the company said “continues to create value in the face of reduced coal demand.” The company added that within these basins it would seek “to drive lower costs through synergies and provide greater value, whereas in the Southwest and Colorado, the company anticipates managing for cash generation.”

In Australia, the company said, “the business plan reinforces that both metallurgical and thermal sectors are core to Peabody,” adding that it “anticipates a smaller but more profitable platform focused on high-quality products and/or top-tier assets to capitalize on higher growth in Asia.”

The company noted that thermal segment margins average 17% over the course of the business plan, “while margins at metallurgical mines point to the need for further optimization.” The company said that the plan contemplates a reduction of metallurgical coal volumes over its five-year life, assuming a strong Australian currency and no major uplift in product pricing. — Alan Zimmerman

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This story first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.