McAfee Enterprise term loan softens some more on back of incremental, downgrades news

By Sara Rosenberg

New York, Dec. 23 – McAfee Enterprise (Magenta Buyer LLC) saw its first-lien term loan move a little lower in the secondary market on Friday as it continued to react to recent news of an incremental term loan and downgrades from S&P Global Ratings.

The McAfee Enterprise first-lien term loan was quoted at 85 bid, 87 offered, down from 85˝ bid, 87˝ offered on Thursday, a market source said.

As previously reported, the company placed a non-fungible $415 million incremental term loan due July 2028 that is priced at a fixed-rate of 12% and is non-callable for one year, then at 103 in year two and par thereafter.

Jefferies LLC is leading the incremental term loan that will be used to fund a dividend and add cash to the balance sheet.

S&P Global Ratings rated the incremental term loan at B-, lowered the company’s issuer credit rating and existing first-lien credit facility rating to B- from B, and cut the second-lien term loan rating to CCC from CCC+.

In the rating release, S&P said that it expects the company to have negative free operating cash flow in 2022 and break even in 2023 due to the transition to ACV contracts and higher interest expense.

Moody’s Investors Service assigned a B2 rating to the incremental term loan, the same rating as the existing first-lien debt, and Fitch Ratings rated the incremental term loan at BB-, same as the rating on the existing first-lien term loan.

McAfee Enterprise is a security software company.

Secondary quiet

In general, the secondary loan market was quiet on Friday as people had pretty much “packed it in” for the holidays, one source remarked.

“Skeleton crews in today. Keeping everything pretty much the same. No real movers. No real trading taking place,” a trader added.

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