ClubCorp term loan weakens with ratings outlook revision; Applied Systems hits market

By Sara Rosenberg

New York, April 12 – ClubCorp Holdings Inc.’s term loan fell a few points in trading on Wednesday as the company’s rating outlook was revised lower by S&P Global Ratings due to stronger refinancing risk related to the debt.

Meanwhile, in the primary market, Applied Systems Inc. approached lenders with an incremental first-lien term loan, and Internet Brands and ImageFIRST Holdings LLC joined this week’s new issue calendar.

ClubCorp retreats

ClubCorp’s term loan dropped to 92 bid, 93½ offered on Wednesday from 94½ bid, 95½ offered on Tuesday as S&P changed the company’s rating outlook to negative from stable, according to a market source.

The company’s issuer credit rating was affirmed at CCC+ and its senior secured credit facility was affirmed at B-.

S&P said that the change in outlook resulted from heightened risk at the company of refinancing its $1.1 billion term loan due September 2024 because it is a highly leveraged borrower, and near-term credit measures and capital market uncertainty may make refinancing at acceptable terms challenging.

Also, S&P pointed to the company’s $425 million senior unsecured notes, which mature in 2025 and will need to be addressed prior to any extension of the $1.1 billion term loan. “The notes currently trade significantly below par at high yields that we believe are distressed, increasing the likelihood of a distressed exchange,” the rating release said.

Under the existing capital structure and S&P’s base-case assumptions, S&P anticipates very high leverage in the low-8x area, EBITDA coverage of interest expense in the mid-1x area, and negative free cash flow in 2023.

ClubCorp is a Dallas-based owner and operator of private golf and country clubs and business, sports and alumni clubs.

Secondary stronger

In general, the secondary market was better by about an eighth to a quarter of a point on the day, a market source said, adding that trading levels got a “little bit of a CPI bounce.”

On Wednesday, the consumer price index report came out, showing a year-over-year rise of 5% for March versus a year-over-year rise of 6% for February.

CPI rose 0.1% in March, compared to 0.4% in February.

Applied Systems holds call

Moving to the primary market, Applied Systems surfaced in the morning with plans to hold a lender call at 3 p.m. ET on Wednesday to launch a fungible $290 million incremental covenant-lite first-lien term loan due September 2026 talked with an original issue discount of 99.75, according to a market source.

Like the existing term loan due 2026, the incremental term loan is priced at SOFR plus 450 bps with a 0.5% floor and has 101 soft call protection until June.

Commitments are due at noon ET on Thursday, the source added.

Nomura Securities is the left lead on the deal that will be used to repay an existing first-lien term loan due 2024, fund cash to the balance sheet, and pay fees and expenses.

Applied Systems is a University Park, Ill.-based cloud software provider to the property & casualty and benefits insurance industry.

Internet readies loan

Internet Brands scheduled a lender call for 11 a.m. ET on Thursday to launch a $4.741 billion five-year first-lien term loan, a market source remarked.

RBC Capital Markets and KKR Capital Markets are leading the deal that will be used to refinance existing first-lien term loans due 2024.

Internet Brands is an El Segundo, Calif.-based provider of software as a service and traffic driven marketplace/media offerings across health, legal, dental and media verticals.

ImageFIRST on deck

ImageFIRST set a lender call for 2:30 p.m. ET on Thursday to launch a non-fungible $100 million add-on term loan, according to a market source.

Antares Capital is leading the deal that will be used for general corporate purposes and acquisition activity.

ImageFIRST is a King of Prussia, Pa.-based provider of linen, laundry, and safety and hygiene services specializing in the healthcare industry.

Loan indices rise

In other news, IHS Markit’s iBoxx loan indices were higher on Tuesday, with the Leveraged Loan indexes (MiLLi) closing out the day up 0.04% and the Liquid Leveraged Loan indices (LLLi) closing out the day up 0.05%.

Month to date, the MiLLi is up 0.43% and year to date it is up 3.5%, and the LLLi is up 0.44% month to date and up 3.75% year to date.

Average secondary market bids in the U.S. on Tuesday were 91.53, up 0.02% from the previous day and down 0.38% year to date.

According to the IHS Markit data, some of the top advancers on Tuesday were LogMeIn’s August 2020 covenant-lite term loan B at 58.33, up from 56.88, Checkers Drive-In’s April 2017 term loan at 78, up from 76.25, and AMC Entertainment’s April 2019 covenant-lite term loan B at 75.89, up from 74.37.

Some top decliners on Tuesday were Rodan & Fields’ June 2018 covenant-lite term loan B at 35.5, down from 35.93, Juice Plus+’s November 2018 term loan at 55.67, down from 56.25, and RSA Security’s April 2021 term loan at 76.88, down from 77.57.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.