Latam Airlines term loan frees to trade following changes; Vericast shops amendment

By Sara Rosenberg

New York, Oct. 11 – Latam Airlines increased the size of its term loan B as its bond offering was scaled back, widened spread and original issue discount, revised CSA and call protection, and added ticking fees before breaking for trading on Tuesday.

In more happenings, Vericast Corp. launched a transaction to revise its capital structure through the combination of two term loans and the refinancing of some term loan debt with second-lien secured notes.

Latam reworked

Latam lifted its five-year term loan B (B2/B+) to $1.1 billion from a revised amount of $1 billion and an initial size of $750 million, raised pricing to SOFR plus 950 basis points from SOFR plus 775 bps, revised CSA to 10 bps one-month rate, 15 bps three-month rate and 25 bps six-month rate from 10 bps, and adjusted the original issue discount to 91.5 from talk in the range of 92 to 93, a market source remarked.

Furthermore, the call protection was changed to non-callable for two years, then at par, from non-callable for one year, then at 101 in year two and par thereafter, and ticking fees were added from pricing until the outside date of half the margin from days 46 to 90 and the full margin thereafter.

Additionally, some revisions were made to documentation, and lenders now provide unfunded commitment to the term loan, the funding of which is conditioned upon emergence from Chapter 11 occurring on or prior to February 2023, instead of lenders fund their term loan commitments at closing, not conditioned upon emergence from Chapter 11, the source continued.

As before, the term loan has a 0.5% floor and amortization of 1% per annum.

Latam hits secondary

Recommitments for Latam’s term loan were due at 1:30 p.m. ET on Tuesday, and the debt began trading late in the day, with levels quoted at 93¼ bid, 94 offered, another source added.

Goldman Sachs Bank USA, JPMorgan Chase Bank, Barclays, BNP Paribas Securities Corp. and Natixis are leading the deal that will be used to help repay existing debtor-in-possession facilities in connection with the company’s emergence from bankruptcy and for general corporate purposes.

Other funds for the transaction will come from $450 million of senior secured notes due 2027, which were downsized from a revised amount of $500 million and an initial size of $750 million with the term loan B upsizing, and $700 million of senior secured notes due 2029, which were downsized from $750 million.

Latam Airlines is a Santiago, Chile-based airline.

Vericast holds call

Vericast held a lender call at 3 p.m. ET on Tuesday, launching an amendment to its existing term loan agreements to combine the roughly $50 million term loan due November 2023 and the existing term loan due June 2026 into one roughly $842.5 million term loan tranche due June 2026, a market source said.

In addition, one of the lenders on the existing term loan due June 2026 consented to be converted into about $274.4 million of new second-lien secured notes due December 2027.

As part of this transaction, lenders are being asked to consent to an amortization holiday for the term loan debt for four quarters, resulting in amortization being rescheduled to 2025, and pricing on the term loan debt will convert to SOFR from Libor with the addition of CSA, the source continued. The spread will be unchanged at 775 bps with a 1% floor.

Through the amendment of the existing debt agreements and partial refinancing of the capital structure, first-lien leverage will be reduced by around 0.8x.

Consents are due on Oct. 17, the source added.

Jefferies LLC is leading the deal.

Vericast, formerly known as Harland Clarke Holdings Corp., is a marketing solutions company.

Loan indices slip

In other news, IHS Markit’s iBoxx loan indices declined on Monday, with the Leveraged Loan indexes (MiLLi) closing out the day down 0.01% and the Liquid Leveraged Loan indices (LLLi) closing out the day down 0.02%.

Month to date, the MiLLi is up 0.74% and year to date its down 2.92%. The LLLi is up 1.09% month to date and down 3.76% year to date.

Average secondary market bids in the U.S. on Monday were 92.52, down 0.03% from the previous day and down 4.44% year to date.

According to the IHS Markit data, some of the top advancers on Monday were CPI International’s July 2017 covenant-lite term loan at par, up from 98.25, DuPont (E.I.) De Nemours’ April 2018 U.S. covenant-lite term loan B2 at 95.75, up from 94.25, and Byju’s November 2021 covenant-lite term loan B at 72.50, up from 71.64.

Some top decliners on Monday were Hearthside Food’s June 2020 incremental covenant-lite term loan B3 at 81.06, down from 86.63, Securus Technology’s June 2017 covenant-lite term loan at 83.50, down from 86.01, and Convergeone’s January 2019 covenant-lite term loan at 69.25, down from 71.

Fund flows

Actively managed loan fund flows on Monday were negative $70 million and loan ETFs were negative $1 million, sources said.

Actively managed loan fund flows on Friday were negative $125 million and loan ETFs were positive $43 million.

Outflows for loan funds year to date total $962 million, including negative $2.9 billion ETFs, sources added.

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