Mad Engine ups term loan to $275 million, finalizes OID at 97.5

By Sara Rosenberg

New York, June 30 – Mad Engine Global LLC upsized its six-year covenant-lite first-lien term loan to $275 million from $250 million and set the original issue discount at 97.5, the midpoint of the 97 to 98 talk, according to a market source.

In addition, amortization on the term loan was changed to 2.5% per annum from 1% per annum, MFN was revised to 50 bps with no sunset and is applicable to incremental term loans and side-car term loans, all asset-sale prepayment step-downs were eliminated, and the excess cash flow sweep was revised to remove the dollar-for-dollar credit from the sweep for capex, permitted acquisition, investments and restricted payment.

Also, the incremental amount was modified to free and clear of the greater of $40 million and 50% EBITDA and the greater of $80 million and 100% of EBITDA for permitted acquisitions only, and “no worse” prongs are available for permitted acquisitions only, the source said.

Furthermore, dividends using available amount are now subject to a total net leverage incurrence test of 3x, the dividend basket for transactions cost excludes the repayment of any seller indebtedness incurred in connection with the transaction, an EOD blocker was added to investments made with available amount, the available amount starter basket was set at $15 million, and an 18-month look forward for pro forma cost savings was set on EBITDA addbacks.

Pricing on the term loan remained at Libor plus 700 basis points with a 1% Libor floor, and the debt still has call protection of 102 in year one and 101 in year two.

Deutsche Bank Securities Inc., Wells Fargo Securities LLC and Credit Suisse Securities (USA) LLC are the bookrunners on the deal.

Recommitments were scheduled to be due at noon ET on Wednesday, the source added.

Proceeds will be used to help finance the acquisition of Fifth Sun from company founder Dan Gonzales, and the funds from the upsizing will reduce the revolving credit facility draw.

Mad Engine, a Platinum Equity portfolio company, is a San Diego-based apparel and accessories company. Fifth Sun is a Chico, Calif.-based supplier of licensed, non-licensed and private label apparel.

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