Radiology Partners steady to softer with downgrade; Inmar sets changes; Covanta accelerated

By Sara Rosenberg

New York, June 6 – In the secondary market on Tuesday, Radiology Partners Holdings LLC’s first-lien term loan was lower to unchanged on the day, depending on the trader, following a ratings downgrade by S&P Global Ratings.

Meanwhile, in the primary market, Inmar Inc. raised the spread on its first-lien term loan, sweetened the call protection and made some changes to documentation, and Covanta Holding Corp. moved up the commitment deadline for its term loans.

Furthermore, Aramark and Bowlero Corp. came out with price talk on their term loan transactions in connection with lender calls.

Radiology flat to down

Radiology Partners’ first-lien term loan was quoted by one trader at 72 bid, 74 offered on Tuesday, down from 72½ bid, 74½ offered on Monday, and by a second trader at 72 bid, 74 offered, unchanged from Monday’s levels, in the wake of a ratings reduction by S&P.

The company’s issuer credit and secured debt ratings were cut to CCC+ from B-, and its unsecured second-lien term loan was cut to CCC- from CCC. The outlook is negative.

S&P said the downgrade reflects Radiology Partners’ constrained liquidity cushion and the possibility of an unsustainable capital structure over the medium term. The rating agency expects rising labor costs and higher start-up costs for new sites will pressure EBITDA margins and cash flows, despite cost-saving initiatives and increased subsidies revenue. And, the company is also currently struggling with delayed collections on receivables due to the No Surprise Act-related arbitration process, S&P added.

According to S&P, the company’s revolving credit facility is becoming current in less than six months and there are significant debt maturities looming in July 2025, which elevate refinancing risk given current capital market conditions.

Radiology Partners is an El Segundo, Calif.-based radiology physician practice management company.

Inmar revised

Switching to the primary market, Inmar lifted pricing on its $950 million first-lien term loan (B3/B-) due May 1, 2026 to SOFR plus 550 basis points from SOFR plus 525 bps, extended the 101 soft call protection to one year from six months, and made modifications to documentation, including to EBITDA definition, MFN, incremental, starter basket and restricted payments, according to a market source.

As before, the term loan has a 0.5% floor and an original issue discount of 96.5.

The term loan allocated on Tuesday, another source added.

Jefferies LLC, Credit Suisse Securities (USA) LLC, Wells Fargo Securities LLC, Goldman Sachs Bank USA and ING are leading the deal that will be used with $485 million of PIK preferred equity to refinance the company’s existing capital structure.

Inmar is a Winston-Salem, N.C.-based provider and partner in facilitating and optimizing workflows for retailers, manufacturers, pharmacies, hospitals and other trading partners through the use of data analytics and tech-enabled logistics capabilities.

Covanta tweaks timing

Covanta accelerated the commitment deadline for its $430 million of term loans to 5 p.m. ET on Wednesday from noon ET on Thursday, a market source said.

The debt is split between a non-fungible $400 million sustainability linked term loan B due Nov. 30, 2028 and a non-fungible $30 million sustainability linked term loan C due Nov. 30, 2028, which will trade as a strip.

Price talk on the term loans is SOFR plus 325 bps with a 0.5% floor and an original issue discount of 98 to 98.5. The term loans have a 12.5 bps coupon increase for each key performance indicator not met by the observation date of Dec. 31, 2025, and 101 soft call protection for six months.

Barclays is the left lead on the deal that will be used to reimburse a portion of EQT Infrastructure’s initial equity contribution in relation to the acquisition of Circon Holdings Inc. from Kinderhook Industries and to enhance liquidity.

Covanta, an EQT portfolio company, is a Morristown, N.J.-based waste to energy company, providing an environmentally sustainable solution for waste disposal. Circon is a La Porte, Tex.-based provider of environmental services.

Aramark holds call

Aramark emerged in the morning with plans to hold a lender call at 3 p.m. ET on Tuesday to launch a $750 million seven-year term loan B (BBB-) talked at SOFR+CSA plus 275 bps to 300 bps with a 0% floor, an original issue discount of 98.5 and 101 soft call protection for six months, a market source remarked.

CSA is 11.448 bps one-month rate, 26.161 bps three-month rate and 42.826 bps six-month rate.

Commitments are due at 5 p.m. ET on June 13, the source added.

JPMorgan Chase Bank is leading the deal that will be used to repay a portion of the company’s roughly $1.1 billion term loan B-3 due 2025.

Aramark is a Philadelphia-based professional services company that provides food, hospitality and facility management services as well as uniform and work apparel.

Bowlero shops add-on

Bowlero surfaced early in the day with a lender call announced for noon ET to launch a fungible $150 million add-on term loan due February 2028 talked with an original issue discount of 97.75 to 98.25, according to a market source.

Pricing on the add-on term loan is SOFR plus 350 bps with a 0% floor.

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

JPMorgan Chase Bank is leading the deal that will be used to fund the acquisition of Lucky Strike Entertainment LLC for about $90 million and to pay down revolver borrowings.

Closing on the acquisition is expected in the first half of Bowlero’s fiscal year 2024, subject to customary conditions.

Bowlero is a Mechanicsville, Va.-based operator of bowling centers. Lucky Strike is an upscale bowling company.

Fund flows

In other news, actively managed loan fund flows on Monday were negative $9 million and loan ETFs were positive $87 million, market sources said.

Led by the ETFs, the leveraged loan asset class is tracking its second inflow in the last 42 weeks.

Inflows for loan funds week-to-date total an estimated $144 million, compared to outflows in the prior week of $926 million, sources added.

Loan indices rise

IHS Markit’s iBoxx loan indices were stronger on Monday, with the Leveraged Loan indexes (MiLLi) closing out the day up 0.12% and the Liquid Leveraged Loan indices (LLLi) closing out the day up 0.11%.

Month to date, the MiLLi is up 0.26% and year to date it is up 4.18%, and the LLLi is up 0.32% month to date and up 4.17% year to date.

Average secondary market bids in the United States on Monday were 91.01, up 0.03% from the previous day and down 0.95% year to date.

According to the IHS Markit data, some of the top advancers on Monday were Optiv’s February 2017 covenant-lite second-lien term loan at par, up from 95, Clear Channel’s July 2020 incremental covenant-lite term loan at 81.83, up from 78.33, and Cineworld’s September 2019 incremental RSA/backstop with rights covenant-lite term loan at 25.67, up from 24.75.

Some top decliners on Monday were System1’s January 2022 covenant-lite term loan at 73.67, down from 75, Consolidated Communications’ April 2021 covenant-lite term loan B-1 at 85.5, down from 86.33, and RSA Security’s April 2021 term loan at 83.83, down from 84.61.

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