Bausch + Lomb softens in trading with planned debt financed acquisition; Lackawanna on deck

By Sara Rosenberg

New York, June 30 – Bausch + Lomb Corp.’s term loan head lower in the secondary market on Friday following the company’s announcement that it plans to buy certain assets from Novartis and take on additional debt to fund the upfront cash purchase price.

Meanwhile, in the primary market, Lackawanna Energy Center LLC joined the near-term calendar with a term loan B-2 and term loan C strip.

Bausch slides

Bausch + Lomb’s term loan fell to 96¼ bid, 97¼ offered on Friday from 97 5/8 bid, 98 1/8 offered on Thursday in reaction to news of an acquisition, which will be funded with debt, according to a market source.

Under the agreement, Bausch + Lomb will purchase Xiidra, a non-steroid eye drop specifically approved to treat the signs and symptoms of dry eye disease, libvatrep, an investigational compound being studied for the treatment of chronic ocular surface pain, and AcuStream, an investigational device that may have the potential to facilitate precise dosing and accurate delivery of certain topical ophthalmic medications to the eye, from Novartis.

The purchase price is up to $2.5 billion, split between a $1.75 billion upfront cash price and potential milestone obligations up to $750 million based on sales thresholds and pipeline commercialization.

J.P. Morgan provided the financing commitment for the transaction.

Closing is expected by the end of the year, subject to regulatory approval and other customary conditions.

Bausch + Lomb is a Vaughan, Ont.-based eye health company.

Lackawanna coming soon

Moving to the primary market, Lackawanna Energy Center set a lender call for 2 p.m. ET on Wednesday to launch a $380 million six-year term loan B-2 and a $95 million six-year term loan C that will be sold as a strip, a market source remarked.

The company’s $945 million of senior secured credit facilities also include a $120 million revolver and a $350 million privately placed fixed-rate term loan B-1, the source added.

Morgan Stanley Senior Funding Inc. is the left lead on the deal that will be used to refinance existing debt, and the term loan C will be used to cash-collateralize letters of credit.

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.

Fund flows

In other news, actively managed loan fund flows on Thursday were negative $26 million and loan ETFs were positive $60 million, market sources said.

Loan funds reported weekly outflows totaling $195 million, including positive $0.4 million ETFs. This was the twenty fourth weekly outflow among the year’s 26 weeks, but the last three weeks’ outflows are the year’s three smallest and compare to an average weekly outflow of $669 million across the year’s other 21 weeks of outflows, sources added.

Year to date, outflows for loan funds total $18.5 billion, with negative $1.4 billion ETFs.

Loan indices rise

IHS Markit’s iBoxx loan indices were stronger on Thursday, with the Leveraged Loan indexes (MiLLi) closing out the day up 0.15% and the Liquid Leveraged Loan indices (LLLi) closing out the day up 0.15%.

Month to date, the MiLLi is up 2.1% and year to date it is up 6.08%, and the LLLi is up 2.06% month to date and up 5.98% year to date.

Average secondary market bids in the U.S. on Thursday were 91.58, up 0.07% from the previous day and down 0.33% year to date.

According to the IHS Markit data, some of the top advancers on Thursday were Juice Plus+’s November 2018 term loan at 45, up from 40, Sinclair Television’s April 2021 covenant-lite term loan B3 at 81.33, up from 79.33, and Apex Tool’s February 2022 covenant-lite term loan B at 92.25, up from 90.01.

Some top decliners on Thursday were Springs Window Fashions’ October 2021 covenant-lite term loan at 80.25, down from 82.75, Jo-Ann Stores’ July 2021 covenant-lite term loan B at 51.14, down from 52.4, and New Trojan/Careismatic’s January 2021 covenant-lite term loan at 53.5, down from 54.5.

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