Talen Energy, Signature Aviation, Titan Acquisition break; Datasite revisions surface

By Sara Rosenberg

New York, April 28 – Talen Energy Supply LLC reduced the sizes of its term loan B and term loan C, firmed the spread at the high end of guidance, removed a pricing step-down, set the original issue discount at the wide side of talk and made some changes to documentation before freeing up for trading on Friday.

Other deals to make their way into the secondary market during the session included Signature Aviation plc (Brown Group Holding LLC) and Titan Acquisition Holdings.

In more happenings, Datasite (Mermaid Bidco Inc.) reduced the size of its U.S. add-on term loan B and added a euro add-on term loan B to its capital structure, and MRC Global Inc. made the decision to pull its term loan B refinancing as a result of a lawsuit filed by Cornell Capital LLC complicating the execution of the transaction.

Talen reworked

Talen Energy trimmed its seven-year senior secured covenant-lite term loan B to $580 million from $825 million and its seven-year senior secured covenant-lite term loan C to $470 million from $545 million, set pricing on the loans at SOFR plus 450 basis points, the high end of the SOFR plus 425 bps to 450 bps talk, eliminated a 25 bps step-down at 2x first-lien net leverage starting June 30, 2024, and finalized the original issue discount at 97, the wide end of the 97 to 98 talk, according to a market source.

Also, documentation changes were made, including to MFN, limitations on Susquehanna, equity rights offering size, accordion, asset sale, starter basket, general investment basket, reinvestment period, unlimited restricted payment ratio and unrestricted subsidiaries basket, the source said.

As before, the term loans have a 0.5% floor and 101 soft call protection for six months, the term loan B has amortization of 1% per annum and the term loan C has no amortization.

Citigroup Global Markets Inc., BMO Capital Markets, Deutsche Bank Securities Inc., Goldman Sachs Bank USA, RBC Capital Markets, Credit Suisse Securities (USA) LLC, MUFG, Morgan Stanley Senior Funding Inc. and Barclays are leading the now $1.05 billion of term loans (Ba3/BB/BB+).

Talen hits secondary

Recommitments for Talen Energy’s term loans were due at noon ET on Friday and the debt freed to trade later in the day, with the term loan B and term loan C strip quoted at 97¾ bid, 98¾ offered, another source added.

The term loans will be used with $1.2 billion of senior secured notes, upsized from $825 million, to refinance the company’s existing secured financing agreements, to add cash to the balance sheet, for general corporate purposes and to pay fees, costs, and expenses related to the transaction.

The new debt is being done in connection with the company’s emergence from Chapter 11.

Closing is expected in late May.

Talen Energy is a Houston-based power generation and infrastructure company.

Signature frees up

Signature Aviation’s fungible $400 million add-on term loan B-2 (B2) due July 2, 2029 began trading too, with levels quoted at 99¼ bid, 99¾ offered on the break and then it moved up to 99½ bid, par offered, according to a trader.

Pricing on the add-on term loan is SOFR plus 375 bps with a 0.5% floor and it was sold at an original issue discount of 99. The debt has 101 soft call protection for six months.

During syndication, the discount on the term loan was tightened from talk in the range of 98 to 98.5.

RBC Capital Markets is the left lead on the deal that will be used to fund a dividend.

Signature Aviation is a London-based aviation services company.

Titan breaks

Titan Acquisition’s $700 million seven-year first-lien term loan B freed up for trading as well, with levels quoted at 98¾ bid, 99¼ offered, a market source remarked.

Pricing on the term loan is SOFR plus 450 bps with a 25 bps step-down at 4x net first-lien leverage and a 25 bps step-down upon an initial public offering, and a 0% floor. The loan was sold at an original issue discount of 98.5, and has 101 soft call protection for six months and ticking fees of half the spread from days 46 to 90 and the full spread thereafter.

During syndication, the term loan was upsized from $675 million, pricing was reduced from SOFR plus 475 bps, the leverage-based step-down was added and the discount was changed from talk in the range of 97 to 98.

JPMorgan Chase Bank, BNP Paribas Securities Corp., Mizuho, Wells Fargo Securities LLC and BofA Securities Inc. are leading the deal that will be used with equity, the amount of which was reduced with the recent loan upsizing, to fund the buyout of the company by Lone Star Funds from Carlyle and Stellex Capital Management.

Closing is expected this year, subject to customary conditions, including governmental approvals.

Titan is a Portland, Ore.-based provider of ship repair services and marine and heavy complex fabrication. The company was formed in 2019 through the combination of Vigor Industrial LLC and MHI Holdings LLC.

Datasite restructured

Datasite scaled back its fungible U.S. add-on term loan B (B2/B-) due December 2027 to $300 million from $400 million and added a fungible €90 million add-on term loan B due December 2027 to its transaction, a market source said.

The U.S. add-on term loan remained priced at SOFR plus 450 bps with a 25 bps step-down at 3.25x net senior leverage, a 0.75% floor and an original issue discount of 98.

Pricing on the add-on euro term loan is Euribor plus 375 bps with a 25 bps step-down at 3.25x net senior leverage and a 25 bps step-down at 2.75x net senior leverage, a 0% floor and a discount of 95, the source continued.

Both term loans are getting 101 soft call protection for six months.

Recommitments were due at 11:30 a.m. ET on Friday, the source added.

Datasite lead banks

JPMorgan Chase Bank, Jefferies LLC, Deutsche Bank Securities Inc. and MUFG are leading Datasite’s loan transaction.

The new term loan debt will be used to refinance a $364 million HoldCo PIK note, for general corporate purposes and to pay transaction fees, costs and expenses.

With this transaction, the company will shift and increase pricing on its existing roughly $360 million term loan to SOFR plus 450 bps with a 0.75% floor from Libor plus 375 bps with a 0.75% floor.

CapVest is the sponsor.

Datasite is a Minneapolis-based secure content collaboration platform for enterprise and advisory customers.

MRC postponed

MRC Global opted to postpone the refinancing of its $295 million term loan B due September 2024 term loan B due to a lawsuit by Cornell Capital LLC in which Cornell, the sole holder of MRC’s 6.5% series A convertible perpetual preferred stock, claims that it needs to consent to the transaction, according to an 8-K filed with the Securities and Exchange Commission on Friday.

The company was in market with a $300 million five-year first-lien term loan B (B3/B) talked at SOFR+10 bps CSA plus 400 bps with a 0.5% floor, an original issue discount of 98.5 to 99 and 101 soft call protection for six months to refinance the existing term loan B.

JPMorgan Chase Bank was the lead on the deal.

MRC said in the 8-K that the lawsuit “complicated the execution of the refinancing on favorable terms” and, therefore, the decision was made to postpone the refinancing.

MRC is a Houston-based distributor of pipe, valves and fittings and other infrastructure products and services to diversified energy and industrial end markets.

Fund flows

In other news, actively managed loan fund flows on Thursday were positive $86 million and loan ETFs were negative $18 million, market sources said.

Weekly outflows for loan funds were $717 million including negative $284 million ETFs. These were the heaviest withdrawals in six weeks, sources continued.

Leveraged loan funds have reported 35 outflows in the last 36 weeks with actively managed funds experiencing a fifty first consecutive weekly withdrawal.

Year to date outflows for loan funds total $12.8 billion, sources added.

Loan indices rise

IHS Markit’s iBoxx loan indices were stronger 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 up 0.03%.

Month to date, the MiLLi is up 0.90% and year to date it is up 3.98%, and the LLLi is up 1.09% month to date and up 4.43% year to date.

Average secondary market bids in the U.S. on Thursday were 91.54, unchanged from the previous day and down 0.37% year to date.

According to the IHS Markit data, some of the top advancers on Thursday were Genesis Care’s March 2020 U.S. covenant-lite term loan B at 30.50, up from 28.71, International Textile’s May 2018 covenant-lite term loan at 50.50, up from 47.67, and Sabre’s August 2022 term loan B at 80.33, up from 78.

Some top decliners on Thursday were Trilliant Food’s April 2018 covenant-lite term loan B at 78, down from 80.25, Xplornet’s October 2021 covenant-lite term loan at 81.07, down from 82.42, and Amentum/Aecom Maverick’s December 2021 second-lien incremental covenant-lite term loan at 91.67, down from 93.

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