Endurance International Group is boosting the size of its first- and second-lien M&A loan package by $50 million amid strong demand for the deal. Pricing won’t change, sources said.
Credit Suisse, Goldman Sachs, and Morgan Stanley are seeking commitments by today at 5:00 p.m. EDT. As noted earlier, the issuer is layering in additional first-lien debt and a new second-lien loan to back the purchase of Hostgator, sources said.
EIG will now look to place $135 million of incremental first-lien term debt, up from $100 million. The new second-lien term loan grows to $140 million, from $125 million. The issuer will seek to increase its RC by $20 million.
First-lien price talk remains at L+625 with a 1.5% LIBOR floor, offered at 98. The loan includes a 101 soft call through April 2013, and matures in April 2018, sources said. The second-lien is talked at L+950 with a 1.5% floor, offered at 98. It includes a 103, 102, 101 call schedule, and matures in October 2018.
The merger is a deleveraging event; currently leveraged at 4.5x all first-lien, the post-merger entity will be leveraged at 3.3x first-lien and 4x total. Roughly $9 million of the extra $50 million of proceeds will go toward a small acquisition. The remainder will go on the balance sheet for additional acquisitions and to pay M&A related earn-outs.
Ratings are B/B1 corporate and facility, pending confirmation following the upsize.
Endurance earlier this year placed a $535 million term loan via Credit Suisse, Goldman Sachs, and Morgan Stanley. The six-year term loan was issued at 99, and is priced at L+625, with a 1.5% LIBOR floor, and includes a 101, one-year soft call premium.
Proceeds were used to refinance the company’s existing $350 million term loan, as well as to repay pay-in-kind preferred stock held by Accel-KKR, and to put cash on the balance sheet for near-term acquisitions, sources added.
The existing loan is governed by a net-secured-leverage test, sources added.
Warburg Pincus and GS Capital Partners’ purchased a majority stake in the company from Accel-KKR in 2011.
Endurance, a provider of online applications and web-hosting services, is currently rated B/B1, with identical first-lien term loan ratings. HostGator is a provider of web hosting, reseller hosting, VPS hosting, and dedicated servers. – Chris Donnelly/Kerry Kantin