Corel firms $485 million first-lien term loan at discount of 95

By Sara Rosenberg

New York, June 27 – Corel Corp. set the original issue discount on its $485 million seven-year covenant-lite first-lien term loan (B2/B-) at 95, the wide end of revised talk of 95 to 96 and wide end of initial talk of 99, according to a market source.

Pricing on the first-lien term loan remained at Libor plus 500 basis points with a 0% Libor floor.

The first-lien term loan has 101 soft call protection for one year and amortization of 2.5% per annum in years one and two, and 5% per annum thereafter.

Previously in syndication, the first-lien term loan was downsized from $550 million, the call protection was extended from six months, amortization was increased from 1% per annum, paid quarterly, with the remainder due at maturity, and other documentation changes were made, including to the accordion and mandatory prepayments.

The accordion is $130 million plus unlimited amounts subject to a 3.75x first-lien net leverage limit if secured on a pari passu basis, a 5.25x secured net leverage limit if junior secured, and a 5.75x total net leverage limit or 2x fixed charge coverage ratio if unsecured.

Mandatory prepayments are from 50% of excess cash flow with step-downs to 25% and 0% at 3.25x and 2.75x first-lien net leverage, respectively, 100% of asset sale proceeds subject to reinvestment rights within 15 months, and 100% of debt issuance proceeds.

The company’s $745 million of senior secured credit facilities also include a $60 million revolver (B2/B-) and a $200 million privately placed second-lien term loan, which was upsized from $135 million when the first-lien term loan was downsized.

Citigroup Global Markets Inc., KKR Capital Markets and Barclays are the joint lead arrangers on the senior secured deal. Citi is the administrative agent.

Proceeds will be used to help fund the buyout of the company by KKR from Vector Capital.

Closing is expected in early July.

Corel is an Ottawa-based software company.

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