Packers Sanitation falls some more; BroadStreet Partners, GMS, ImageFirst changes surface

By Sara Rosenberg

New York, April 26 – In the secondary market on Wednesday, Packers Sanitation Services Inc.’s (PSSI) term loan continued to soften as investors were still reacting to recent news reports that JBS USA is terminating its contracts with the company.

Meanwhile, in the primary market, BroadStreet Partners Inc. increased the size of its incremental term loan B-3, firmed the spread at the low end of guidance and revised the issue price, and GMS Inc. (GYP Holdings III Corp.) modified pricing on its term loan B and tightened the original issue discount.

Also, ImageFirst Holdings LLC reduced pricing on its incremental term loan, and Heartland Dental LLC joined this week’s primary calendar.

Packers slides

Packers Sanitation’s term loan dropped to 48½ bid, 51 offered on Wednesday from 50 bid, 55 offered on Tuesday in continued reaction to news that JBS USA is canceling its contracts with the company, a trader remarked.

On Monday, prior to the JBS news, the term loan was quoted at 77½ bid, 81½ offered, the trader added.

The term loan has been on a rollercoaster ride since early last week, spurred on by reports that another Packers Sanitation customer, Cargill Inc., terminated all contracts for sanitation services with Packers Sanitation as a result of allegations of the use of child labor.

Following the Cargill news, the term loan dropped into the 60s last week, from levels of 91½ bid 92½ offered on April 17. The debt then started to climb back up into the 70s once the company came out with plans to hold a call for lenders on April 24 to address the situation, and once some buyers came into the name thinking it was attractive in the 60s context.

Packers Sanitation is a Kieler, Wis.-based provider of mission critical cleaning, sanitation and compliance services to the food processing industry. JBS is a producer of beef, pork, chicken and packaged food products. Cargill is a Minneapolis-based food company.

BroadStreet reworked

Moving to the primary market, BroadStreet Partners lifted its incremental term loan B-3 (B2/B) due January 2029 to $935 million from $735 million, set pricing at SOFR plus 400 bps, the low end of the SOFR plus 400 bps to 425 bps talk, and changed the original issue discount to 98.75 from 98, according to a market source.

The term loan still has a 0% floor and 101 soft call protection for six months.

Commitments continued to be due at 5 p.m. ET on Wednesday, the source added.

RBC Capital Markets, BMO Capital Markets, M&T Bank, CIBC, The Bank of Nova Scotia, TD Securities (USA) LLC and Truist are leading the deal that will be used to support a new core agency partnership.

BroadStreet is a Columbus, Ohio-based insurance broker.

GMS revised

GMS adjusted price talk on its $500 million seven-year term loan B (Ba2/BB-) to a range of SOFR plus 300 bps to 325 bps from a range of SOFR plus 325 bps to 350 bps, and then set the spread at SOFR plus 300 bps, a market source said.

Additionally, the original issue discount on the term loan was tightened to 99.5, from revised talk in the morning of 99.25 and initial talk of 98.5, the source continued.

As before, the term loan has a 0% floor and 101 soft call protection for six months.

Commitments are due at 11 a.m. ET on Thursday, changed from a revised deadline of 5 p.m. ET on Wednesday and an original deadline of 5 p.m. ET on Thursday, the source added.

JPMorgan Chase Bank is leading the deal that will be used to help refinance an existing term loan B due 2025.

GMS is a Tucker, Ga.-based distributor of interior construction products.

ImageFirst flexes

ImageFirst trimmed pricing on its non-fungible $100 million incremental covenant-lite term loan (B3/B) to SOFR plus 500 bps from SOFR plus 550 bps, a market source remarked.

The incremental term loan still has CSA of 10 bps one-month rate, 15 bps three-month rate and 25 bps six-month rate, a 0.75% floor, an original issue discount of 97 and 101 soft call protection for six months.

Antares Capital is leading the deal that will be used for general corporate purposes and to fund acquisitions under letters of intent.

In connection with this transaction, pricing on the company’s existing $265 million first-lien term loan will be repriced to SOFR+CSA plus 500 bps with a 0.75% floor from Libor plus 450 bps with a 0.75% floor.

Pro forma leverage is 3.5x and pro forma adjusted EBITDA is $98 million.

Calera Capital is the sponsor.

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

Heartland on deck

Heartland Dental set a lender call for noon ET on Thursday to launch an up to roughly $1,850,200,000 senior secured amended and extended first-lien term loan due April 30, 2028, according to a market source.

The term loan has 101 soft call protection for six months.

Commitments and consents are due at noon ET on May 3, the source added.

KKR Capital Markets, Jefferies LLC, BMO Capital Markets, TD Securities (USA) LLC, Credit Agricole, Mizuho, MUFG, SMBC and Macquarie Capital (USA) Inc. are leading the loan that will be used with $500 million of new senior secured notes, $200 million of new cash equity and a $75 million new strategic partner contribution to partially refinance extending lenders as part of an amend and extend of their existing term loan and for general corporate purposes.

KKR and Ontario Teachers’ Pension Plan are the sponsors.

Heartland Dental is an Effingham, Ill.-based dental support organization.

Fund flows

In other news, actively managed loan fund flows on Tuesday were negative $74 million and loan ETFs were negative $30 million, market sources said.

Actively managed high-yield fund flows on Tuesday were negative $4 million and high-yield ETFs were positive $262 million.

Totaling about $8 billion over the past four weeks, the high-yield asset class is seeing its largest stretch of inflows since November amid sharply lower rates, sources added.

Loan indices dip

IHS Markit’s iBoxx loan indices were weaker on Tuesday, with the Leveraged Loan indexes (MiLLi) closing out the day down 0.02% and the Liquid Leveraged Loan indices (LLLi) closing out the day down 0.01%.

Month to date, the MiLLi is up 0.91% and year to date it is up 4%, and the LLLi is up 1.13% month to date and up 4.46% year to date.

Average secondary market bids in the U.S. on Tuesday were 91.57, down 0.34% year to date.

According to the IHS Markit data, some of the top advancers on Tuesday were Learfield Communications’ December 2016 covenant-lite term loan B at 73.5, up from 70.88, AccentCare’s June 2021 covenant-lite term loan at 68, up from 67, and Panther Purchaser’s January 2021 term loan at 94.05, up from 92.81.

Some top decliners on Tuesday were Packers Sanitation Services/PSSI’s March 2021 covenant-lite term loan at 49.58, down from 77, Envision Healthcare/Amsurg’s July 2022 first-out covenant-lite term loan at 74, down from 79, and Akorn’s October 2020 exit term loan at 19.2, down from 20.

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