Applied Systems breaks; Liberty Tire retreats; PDC Wellness revised; Qualtrics accelerated

By Sara Rosenberg

New York, April 13 – Applied Systems Inc. tightened the issue price on its incremental first-lien term loan and then the debt made its way into the secondary market on Thursday, with levels quoted above par.

Also in trading, Liberty Tire Recycling LLC’s (LTR Intermediate Holdings Inc.) term loan headed lower following news of ratings downgrades by S&P Global Ratings.

In other happenings, PDC Wellness & Personal Care Co. (Parfums Holding Co. Inc.) increased the size of its first-lien term loan, Qualtrics (Quartz AcquireCo LLC) moved up the commitment deadline for its term loan B, and Internet Brands released price talk on its term loan in connection with its lender call.

Applied tweaked, frees

Applied Systems changed the issue price on its fungible $290 million incremental covenant-lite first-lien term loan due September 2026 to par from 99.75, a market source said.

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

Commitments continued to be due at noon ET on Thursday and the incremental term loan broke for trading in the afternoon, with levels quoted at par 1/8 bid, par ˝ offered, a trader added.

Nomura Securities, Jefferies LLC and Macquarie Capital (USA) Inc. are leading 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.

Liberty Tire softens

Liberty Tire’s term loan fell in trading to 88˝ bid, 90˝ offered on Thursday from 90˝ bid, 92˝ offered on Wednesday as the company’s issuer credit and senior secured debt ratings were cut by S&P to B- from B, a trader remarked. The outlook is negative.

The downgrade reflects the company’s weakening EBITDA and free operating cash flow over the last few quarters, which have tightened its liquidity and increased its leverage metrics, the rating release said. In addition, the company generated negative free operating cash flow in 2022 and S&P expects this will continue in 2023.

Due to its weakened earnings, Liberty Tire’s S&P Global Ratings-adjusted debt to EBITDA increased above 7x for the 12-months ended December 2022 and S&P expects this metric will remain above 7x as of the end of 2023.

The negative outlook reflects S&P’s expectation that the company’s debt leverage will remain elevated over the next 12 months.

Liberty Tire is a Pittsburgh-based provider of tire-recycling services.

PDC upsizes

Back in the primary market, PDC Wellness & Personal Care raised its covenant-lite first-lien term loan due June 2026 to $655 million from up to $648.6 million, according to a market source.

As before, the term loan is priced at SOFR+CSA plus 600 bps with a 1.5% floor, an original issue discount of 94 for new money and a 600 bps extension fee for existing lenders, and has hard call protection of 102 in year one and 101 in year two. CSA is 11.4 bps one-month rate, 26.2 bps three-month rate and 42.8 bps six-month rate.

The company’s now $694 million of credit facilities (B3/B-) also includes a $39 million revolver due March 2026.

Allocations are expected on Friday and closing is expected at the end of this month, the source added.

Nomura Securities, Macquarie Capital (USA) Inc. and others to be named are leading the deal that will be used to extend the existing revolver and first-lien term loan maturities by two years.

Current pricing on the existing term loan is Libor plus 400 bps with a 0% floor.

PDC is a Stamford, Conn.-based wellness and personal care products company.

Qualtrics revises timing

Qualtrics accelerated the commitment deadline for its $1 billion seven-year term loan B (B1/B/BB+) to 5 p.m. ET on Thursday from noon ET on Tuesday, a market source said.

Talk on the term loan is SOFR plus 375 bps to 400 bps with a 25 bps step-down at 1.25x gross leverage and a 25 bps step-down upon an initial public offering, a 0.5% floor, an original issue discount of 98 and 101 soft call protection for six months.

JPMorgan Chase Bank, BMO Capital Markets, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., KKR Capital Markets, Mizuho, RBC Capital Markets, UBS Investment Bank and Wells Fargo Securities LLC are leading the deal that will be used with equity to fund the buyout of the company by Silver Lake and Canada Pension Plan Investment Board for $18.15 per share in cash. The transaction values Qualtrics at about $12.5 billion.

Closing is expected in the second half of this year, subject to customary conditions, including the receipt of the regulatory approvals.

Qualtrics, based in Provo, Utah, and Seattle, is a cloud-native software provider that helps organizations identify and resolve points of friction across all digital and human touchpoints in their business.

Internet Brands guidance

Internet Brands held its lender call on Thursday morning and announced talk on its $4.741 billion five-year first-lien term loan (B1/B) at SOFR plus 425 bps with a 0.5% floor, an original issue discount of 97.5 and 101 soft call protection for six months, a market source remarked.

Commitments are due at noon ET on April 20, the source added.

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.

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