Citrix Systems softens, Covetrus basically flat from break levels; Ontic sets price talk

By Sara Rosenberg

New York, Sept. 21 – Citrix Systems Inc. (Tibco Software Inc.) saw its term loan B soften a little in trading on Wednesday from break levels seen in the prior evening, while Covetrus Inc.’s (Corgi BidCo Inc.) first-lien term loan was relatively unchanged from its free to trade levels.

Meanwhile, in the primary market, Ontic (Bleriot US Bidco Inc.) released price talk on its incremental first-lien term loan in connection with its lender call.

Citrix dips

Citrix Systems’ $4.05 billion 6.5-year term loan B was quoted at 90 5/8 bid, 91 1/8 offered by one trader on Wednesday morning, by a second trader at 91 bid, 91¼ offered in the early afternoon and by a third trader around 90 7/8 bid, 91 1/8 offered late in the day. By comparison, the loan freed to trade last night at 91¼ bid, 91¾ offered.

Pricing on the U.S. term loan B is SOFR+10 basis points CSA plus 450 bps with a 0.5% floor and it was sold at an original issue discount of 91. The debt has 101 soft call protection for one year.

The company’s $8.05 billion equivalent credit facilities (B) also include a $500 million equivalent euro 6.5-year term loan B, a $1 billion five-year revolver and a $2.5 billion six-year term loan A.

The euro term loan B is priced at Euribor plus 450 bps with a 0% floor and was issued at a discount of 91. This tranche has 101 soft call protection for one year as well.

Citrix buyout

Citrix will use the new loans, $4 billion of secured notes, $3.95 billion of seven-year second-lien secured debt, $2.5 billion of preferred equity and roughly $6.5 billion of equity to fund its acquisition by Vista Equity Partners and Evergreen Coast Capital Corp. for $104.00 in cash per share and merger with Tibco Software Inc., one of Vista’s portfolio companies, to repay existing debt at Citrix and Tibco and to add cash to the balance sheet.

During syndication, the discount on the term loan Bs firmed at the wide end of revised talk of 91 to 92 and wide of initial talk of 92, the call protection was extended from six months, leverage-based pricing step-downs were eliminated, modifications were made to MFN, incremental, reinvestment period for asset sales the excess cash flow sweep, debt incurrence, restricted payments, permitted investments, available amount, EBITDA and permitted liens, Chewy and Serta protections were added, and the inside maturity basket, permitted alternative security debt and asset-sale step-downs were removed.

Also, the term loan A was downsized from a revised amount of $3 billion and an initial size of $3.5 billion as the company’s 6.5-year first-lien secured notes offering was increased to $4 billion from a revised amount of $3.5 billion and an initial size of $3 billion.

Citrix leads

BofA Securities Inc., Credit Suisse Securities (USA) LLC, Goldman Sachs Bank USA, Barclays, Citigroup Global Markets Inc., Deutsche Bank Securities Inc., KKR Capital Markets LLC, Mizuho Bank, Morgan Stanley Senior Funding Inc., RBC Capital Markets, Apollo Global Funding, Jefferies LLC, BMO Capital Markets, BNP Paribas Securities Corp., Guggenheim, HSBC Securities (USA) Inc., Macquarie Capital (USA) Inc., Nomura Securities International Inc., Truist Securities Inc., UBS Securities LLC, Wells Fargo Securities LLC, KeyBanc Capital Markets Inc., MUFG, The Bank of Nova Scotia, Societe Generale, Stifel Nicolaus and Co., SPC Capital Markets LLC, TD Securities (USA) LLC, Fifth Third Bank, ING Capital LLC, IMI, Natixis, Santander Bank and U.S. Bank are leading Citrix’s credit facilities.

Closing is expected next week, subject to customary conditions.

Citrix is a Fort Lauderdale, Fla.-based provider of secure, unified digital workspace technology. Tibco is a Palo Alto, Calif.-based infrastructure and business intelligence software company.

Covetrus fairly steady

Covetrus’ $1.525 billion seven-year covenant-lite first-lien term loan (B1/B-) was basically unchanged from its recent break levels, with the debt quoted at 94 3/8 bid, 94¾ offered by one trader in the morning and at 94¼ bid, 94½ offered by a second trader in the early afternoon. On Tuesday night, the loan freed up at 94¼ bid, 94¾ offered.

Pricing on the first-lien term loan is SOFR plus 500 bps with a 0.5% floor and it was sold at an original issue discount of 94. The debt has 101 soft call protection for one year.

During syndication, pricing on the first-lien term loan was set at the high end of the SOFR plus 475 bps to 500 bps talk, the discount finalized at the wide end of revised talk of 94 to 95 and wide of initial talk in the range of 95 to 96, the call protection was extended from six months, changes were made to MFN, accordion, pari passu debt, business line exception, asset sale, excess cash flow sweep, other ratio debt, general restricted payment basket, unlimited investments, EBITDA cost savings and synergies, minimum consolidated coverage ratio for acquisitions and investments, ratio liens basket, available amount and post-IPO restricted payment basket, the restricted payment debt basket and the investments in joint ventures basket were removed, J. Crew and Chewy provisions were added and quarterly lender calls were added.

Covetrus second-lien

In addition to the first-lien term loan, Covetrus is getting a $350 million privately placed second-lien term loan and, based on the commitment letter, is expected to get a $300 million five-year revolver.

Deutsche Bank Securities Inc., UBS Investment Bank, BMO Capital Markets, Mizuho Securities USA LLC, TD Securities (USA) LLC, Santander Bank and ING Capital LLC are leading Covetrus’ first-lien debt.

The credit facilities will be used with equity to fund the buyout of the company by Clayton, Dubilier & Rice and TPG Capital for $21.00 per share in cash, representing an enterprise value of about $4 billion.

Closing is expected this year, subject to Covetrus shareholder approval and other customary conditions.

Covetrus is a Portland, Me.-based animal-health technology and services company.

Ontic proposed terms

Moving to the primary market, Ontic held its lender call on Wednesday morning and announced talk on its non-fungible $85 million incremental covenant-lite first-lien term loan due October 2026 at SOFR+10 bps CSA plus 450 bps with a 0% floor, an original issue discount of 95 to 96 and 101 soft call protection for six months, a market source said.

Commitments are due at 5 p.m. ET on Tuesday.

Nomura Securities is the left lead on the deal that will be used to repay outstanding revolver borrowings, for general corporate purposes and to pay fees and expenses.

Ontic is a provider of OEM-licensed parts and aftermarket services for mature aerospace and defense platforms.

Loan indices

In other news, IHS Markit’s iBoxx loan indices declined on Tuesday, with the Leveraged Loan indices (MiLLi) closing out the day down 0.09% and the Liquid Leveraged Loan indices (LLLi) closing out the day down 0.08%.

Month to date, the MiLLi is down 0.49% and year to date its down 1.94%. The LLLi is down 0.72% month to date and down 3.11% year to date.

Average secondary market bids in the U.S. on Tuesday were 93.47, down 0.11% from the previous day and 3.49% year to date.

According to the IHS Markit data, some of the top advancers on Tuesday were Checkers Drive-In’s April 2017 term loan at 84.25, up from 81, Cineworld’s February 2018 U.S. covenant-lite term loan at 48.69, up from 47.63, and AMCP Clean Acquisition’s June 2018 covenant-lite term loan at 79.20, up from 78.

Some top decliners on Tuesday were Envision Healthcare’s October 2018 covenant-lite unvoted term loan at 27.40, down from 29.53, Isagenix’s June 2018 term loan at 40.85, down from 42.25, and Heritage Power’s July 2019 term loan at 35.61, down from 36.50.

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