Virtus talks incremental term B, repricing at Libor plus 250-275 bps

By Sara Rosenberg

New York, Feb. 5 – Virtus Investment Partners Inc. launched on Monday its $105 million incremental senior secured covenant-light term loan B (BB) due June 1, 2024 and repricing of its existing $258.7 million senior secured covenant-light term loan (BB) due June 1, 2024 with price talk of Libor plus 250 basis points to 275 bps with a 0.75% Libor floor, according to a market source.

The incremental loan is talked with an original issue discount of 99.75 and the repricing is offered at par, the source said.

The term loan debt includes 101 soft call protection for six months and amortization of 1% per annum.

The incremental term loan has a ticking fee of half the margin from days 31 to 60 and the full margin thereafter.

Morgan Stanley Senior Funding Inc. is the lead bank on the deal.

Commitments/consents are due at noon ET on Friday, the source added.

Proceeds from the incremental loan will be used to fund the acquisition of Sustainable Growth Advisers (SGA), an investment manager specializing in high-conviction U.S. and global growth equity portfolios.

The repricing will take the existing term loan down from Libor plus 375 bps with a step-down to Libor plus 350 bps at less than 1 times secured net leverage and a 0.75% Libor floor.

Virtus would purchase the equity interest currently held by Estancia Capital Management as well as a portion of the equity held by SGA’s partners, including its three co-founders. Key investment professionals will retain the remaining equity in the company, enter into long-term employment agreements, and reinvest a meaningful portion of their after-tax proceeds from the transaction into the company’s investment strategies.

Closing is expected in mid-2018, subject to customary conditions and client approvals.

Virtus is a Hartford, Conn.-based provider of investment management products and services.

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