New York, Sept. 21 – Garrison Capital Inc., an affiliate of Garrison Investment Group LP, announced on Friday that it sold a $420 million collateralized loan obligation offering.
The CLO was priced by Garrison Funding 2016-2 Ltd., which will be renamed Garrison Funding 2018-2 Ltd. before the closing date.
The issue includes a $50 million class A-1R revolver notes (S&P: AAA (sf), DBRS: AAA) with a coupon of Libor plus 158 basis points priced at par, a $170.4 million class A-1T term notes (S&P: AAA (sf), DBRS: AAA) with a coupon of Libor plus 158 bps priced at par, a $55.10 million class A-2 term notes (S&P: AA (sf)) with a coupon of Libor 245 bps priced at par and a $36.5 million class B term notes (S&P: A (sf)) with a coupon of Libor plus 317 bps priced at 99.5.
Nine months after closing, $25 million of the A-1R revolver will convert to term notes.
The company retained the class B notes and $108 million of subordinated notes and equity.
The reinvestment period will end in October 2022 and the CLO matures in October 2030.
Proceeds will be used to refinance the existing 2016-2 CLO and will increase leverage to $275.5 million from $192 million.
Natixis Securities America LLC was the placement agent.
“This new facility will recapitalize our balance sheet closer to our new targeted leverage level of 1.75 to 1.00 debt to equity and at a significantly cheaper cost, said Brian Chase, Garrison Capital’s chief financial officer, in a news release.
“We expect this transaction to be very accretive to the company’s shareholders as we deploy this liquidity into attractive senior loans over the coming months.”
The original 2016-2 CLO was a $300 million transaction that included $25 million of class A-1R revolver notes with a coupon of Libor plus 220 bps, $88.15 million of class A-1T term notes with a coupon of Libor plus 220 bps, $25 million of 3.41% class A-1F term notes, $20.7 million of class A-2 term notes with a coupon of Libor plus 315 bps, $21.45 million of class B term notes with a coupon of Libor plus 400 bps and $11.7 million of class C term notes with a coupon of Libor plus 600 bps.
The company retained the $108 million equity tranche of subordinated notes.
Garrison Capital is a New York-based business development company that mostly invests in loans to U.S. middle-market companies.
| Issuer: | Garrison Funding 2016-2 Ltd., to be renamed Garrison Funding 2018-2 Ltd.
|
| Amount: | $420 million
|
| Maturity: | October 2030
|
| Securities: | Floating-rate and subordinated notes
|
| Structure: | Cash flow CLO
|
| Placement agent: | Natixis Securities America LLC
|
| Manager: | Garrison Investment Group, LP
|
| Announcement date: | Sept. 21
|
| Settlement date: | Oct. 18
|
|
|
| Class A-1R notes
|
| Amount: | $50 million
|
| Securities: | Revolver
|
| Coupon: | Libor plus 158 bps
|
| Price: | Par
|
| Ratings: | S&P: AAA (sf)
|
| DBRS: AAA
|
|
|
| Class A-1T notes
|
| Amount: | $170.4 million
|
| Securities: | Term notes
|
| Coupon: | Libor plus 158 bps
|
| Price: | Par
|
| Ratings: | S&P: AAA (sf)
|
| DBRS: AAA
|
|
|
| Class A-2 notes
|
| Amount: | $55.1 million
|
| Securities: | Term notes
|
| Coupon: | Libor plus 245 bps
|
| Price: | Par
|
| Rating: | S&P: AA (sf)
|
|
|
| Class B notes
|
| Amount: | $21.45 million
|
| Securities: | Term notes
|
| Coupon: | Libor plus 400 bps
|
| Price: | 98.9
|
| Rating: | S&P: A expected
|
|
|
| Class C notes
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| Amount: | $36.5 million
|
| Securities: | Term notes
|
| Coupon: | Libor plus 317 bps
|
| Price: | 99.5
|
| Rating: | S&P: A (sf)
|
|
|
| Equity
|
| Amount: | $108 million
|
| Securities: | Subordinated notes
|
| Ratings: | Non-rated
|
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