DexKo Global term loan frees to trade atop OID; Lackawanna Energy holds at break levels

By Sara Rosenberg

New York, July 21 – DexKo Global Inc. lowered the spread on its incremental first-lien term loan and tightened the original issue discount, and then the debt made its way into the secondary market on Friday.

Also, Lackawanna Energy Center LLC’s strip of term loan B-2 and term loan C debt held steady after freeing up for trading on Thursday evening.

In addition, Jones DesLauriers Insurance Management Inc. (Navacord) joined the near-term primary calendar with plans for a new first-lien term loan B.

DexKo flexes, breaks

DexKo cut pricing on its $300 million incremental first-lien term loan due Oct. 4, 2028 (B2/B-) to SOFR plus 425 basis points from talk in the range of SOFR plus 450 bps to 475 bps and adjusted the original issue discount to 97 from 96, according to a market source.

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

Recommitments were due at 11 a.m. ET on Friday, and the term loan freed to trade in the afternoon, with levels quoted at 97¼ bid, 98¼ offered, another source added.

Goldman Sachs Bank USA, Deutsche Bank Securities Inc., Credit Suisse Securities (USA) LLC, BMO Capital Markets, RBC Capital Markets, BofA Securities Inc., Barclays, TD Securities (USA) LLC, CIBC and BNP Paribas Securities Corp. are leading the deal. Credit Suisse is the agent.

The new loan will be used to refinance the company’s U.S. first-lien seller term loan and repay ABL revolver borrowings.

Brookfield is the sponsor.

DexKo is a Novi, Mich.-based manufacturer and distributor of highly engineered components and systems critical to the safety and performance of a range of towable and related applications.

Lackawanna steady

Lackawanna Energy Center’s strip of $380 million six-year term loan B-2 and $82 million six-year term loan C debt was quoted at 97¼ bid, 98¼ offered on Friday, in line with where the debt broke for trading on Thursday night, a trader remarked.

Pricing on the term loan debt is SOFR plus 500 bps with a 0.5% floor and an original issue discount of 97. The debt has 101 soft call protection for one year.

During syndication, the term loan C was downsized from $95 million due to final letter-of-credit posting requirements, and the call protection was extended from six months.

The company’s $932 million of senior secured credit facilities (Ba3/BB-) also include a $120 million revolver, and a $350 million privately placed term loan B-1 priced at a fixed-rate of 9.5%. The term loan B-1 is non-callable for two years, then at 101 in year three.

Lackawanna leads

Morgan Stanley Senior Funding Inc., BMO Capital Markets, BNP Paribas Securities Corp. and MUFG are leading Lackawanna Energy Center’s credit facilities.

Proceeds from the term loan B debt will be used to repay the existing debt of the company and the holding company, the term loan C will be used to fund a collateral account to cash collateralize the issuance of letters of credit, and the revolver will fund various short-term working capital requirements and repay an existing working capital loan.

Closing is expected during the week of July 31.

Lackawanna is a 1,483MW combined-cycle natural gas-fired power plant located in Jessup, Pa., in the MAAC sub-region of PJM. The project was developed by Invenergy and has a partnership with Blackrock Global Infrastructure Funds.

Jones DesLauriers on deck

Jones DesLauriers Insurance Management set a lender call for 10:30 a.m. ET on Monday to launch a $350 million first-lien term loan B due March 16, 2030, a market source said.

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

Commitments are due at noon ET on July 28, the source added.

BofA Securities Inc. is the left lead arranger on the deal that will be used to refinance the company’s existing first-lien Canadian term loan due March 2028 and for general corporate purposes, including near-term acquisition opportunities.

Jones DesLauriers is a Canadian commercial insurance broker.

Loan indices mixed

In other news, IHS Markit’s iBoxx loan indices were mixed on Thursday, with the Leveraged Loan indexes (MiLLi) closing out the day up 0.02% and the Liquid Leveraged Loan indices (LLLi) closing out the day unchanged.

Month to date, the MiLLi is up 1.05% and year to date it is up 7.34%, and the LLLi is up 0.87% month to date and up 7.07% year to date.

Average secondary market bids in the United States on Wednesday were 92.16, up 0.01% from the previous day and up 0.3% year to date.

According to the IHS Markit data, some of the top advancers on Thursday were Thrasio’s December 2020 term loan at 76.67, up from 75, Endo Pharmaceuticals’ March 2021 covenant-lite RSA term loan B at 74.08, up from 72.5, and Diamond Sports/Sinclair/Regional Sports’ March 2022 first priority term loan at 76.21, up from 74.83.

Some top decliners on Thursday were RSA Security’s April 2021 covenant-lite term loan at 76.13, down from 84.78, iQor’s November 2020 second out covenant-lite PIK term loan at 64.67, down from 66, and Air Medical’s March 2018 covenant-lite term loan at 59.38, down from 60.25.

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