Samsonite, Shutterfly loans shrug off ratings changes; Fortrea, Covanta, RxBenefits set talk

By Sara Rosenberg

New York, June 1 – In the secondary market on Thursday, Samsonite International SA’s term loans were unchanged following an upgrade of the rating on the debt by Moody’s Investors Service, and Shutterfly LLC’s term loan held steady after the company’s ratings were cut by Moody’s.

Meanwhile, in the primary market, Fortrea, Covanta Holding Corp. and RxBenefits Inc. (RXB Holdings Inc.) released price talk on their loan transactions in connection with their lender calls.

Samsonite steady

Samsonite’s old term loan was quoted at 99½ bid, par ¼ offered on Thursday and its incremental term loan was quoted at 99 7/8 bid, par 3/8 offered, both unchanged on the day, following an upgrade by Moody’s of the senior secured debt rating to Ba1 from Ba2, a market source remarked.

The company’s corporate family rating was affirmed at Ba2 and the outlook is stable.

Moody’s said that the upgrade of the senior secured bank credit facilities, which includes an $850 million revolver and term loans, reflects the reduction of secured debt in the capital structure particularly due to the paydown of the revolver over the course of 2022 and term loan repayments.

In addition, Moody’s anticipates that the company’s debt-to-EBITDA will decline to 2.9x by year-end 2023 and in the mid-to-high 2x the year after.

Samsonite is a Hong Kong-based manufacturer of bags and luggage.

Shutterfly unchanged

Shutterfly’s term loan was quoted at 55 bid, 60 offered on Thursday, in line with Wednesday’s levels, despite being downgraded by Moody’s, a market source said.

Moody’s trimmed the company’s corporate family rating to Caa2 from B3, senior secured debt ratings to Caa1 from B2 and senior unsecured notes to Ca from Caa2, and revised the outlook to negative from stable.

The downgrades were driven by the impact of a weak macroeconomy on consumer demand and the expectation of a downshift in global economic growth in the second half of this year, Moody’s explained.

Additionally, Moody’s expects that Shutterfly’s operating performance, leverage and liquidity will remain challenged over the rating horizon following weaker-than-expected earnings in the fourth quarter of 2022.

The downgrade also considers a likely debt exchange to recapitalize the debt-heavy balance sheet, reduce cash interest expense via a new PIK debt structure and address liquidity challenges, Moody’s added.

Shutterfly is a San Jose, Calif.-based manufacturer and seller of customizable photo-based products and services.

Fortrea guidance

Moving to the primary market, Fortrea held its lender call on Thursday morning and announced talk on its $570 million seven-year term loan B at SOFR plus 400 basis points to 425 bps with a 0.5% floor, an original issue discount of 98 to 98.5 and 101 soft call protection for six months, according to a market source.

Commitments are due at noon ET on June 12, the source added.

The company’s $1.52 billion of credit facilities (Ba3/BB/BB+) also include a $450 million revolver and a $500 million term loan A.

Goldman Sachs Bank USA, Barclays, BofA Securities Inc., Citigroup Global Markets Inc., JPMorgan Chase Bank, MUFG, PNC Bank and Wells Fargo Securities LLC are leading the deal that will be used with $570 million of other secured debt to fund the spinoff of the company from Labcorp, under which Fortrea will make an expected $1.605 billion cash distribution to Labcorp.

Closing is expected mid-year, subject to certain customary conditions.

Fortrea is a Durham, N.C.-based contract research organization providing phase I through IV biopharmaceutical product and medical devices services.

Covanta holds call

Covanta held a lender call at 2 p.m. ET, launching a non-fungible $400 million sustainability linked term loan B due Nov. 30, 2028 and a non-fungible $30 million sustainability linked term loan C due Nov. 30, 2028, both talked at SOFR plus 325 bps with a 0.5% floor, an original issue discount of 98 to 98.5 and 101 soft call protection for six months, a market source remarked.

The term loans, which will trade as a strip, have a 12.5 bps coupon increase for each KPI not met by the observation date of Dec. 31, 2025.

Commitments are due at noon ET on June 8, the source added.

Barclays is the left lead on the deal that will be used to reimburse a portion of EQT Infrastructure’s initial equity contribution in relation to the acquisition of Circon Holdings Inc. from Kinderhook Industries and to enhance liquidity.

Covanta, an EQT portfolio company, is a Morristown, N.J.-based waste to energy company, providing an environmentally sustainable solution for waste disposal. Circon is a La Porte, Tex.-based provider of environmental services.

RxBenefits talk

RxBenefits came out with talk of SOFR plus 525 bps with a 0.75% floor, an original issue discount of 97.5 and 101 soft call protection for six months on its non-fungible $150 million add-on first-lien term loan (B3/B) due Dec. 18, 2027 that launched with a call in the morning, according to a market source.

Commitments are due at 5 p.m. ET on June 14.

Barclays, Deutsche Bank Securities Inc. and Goldman Sachs Bank USA are leading the deal, which will be used with balance sheet cash to repay an existing second-lien term loan.

Advent International and Great Hill Partners are the sponsors.

RxBenefits is a Birmingham, Ala.-based pharmacy benefits optimizer for the employee benefit industry.

Fund flows

In other news, actively managed loan fund flows on Wednesday were negative $24 million and loan ETFs were negative $12 million, market sources said.

The tracking estimate for Thursday night’s weekly Lipper numbers for loans are outflows totaling $419 million, sources added. These would be the thirty ninth outflow for loan funds in the last 40 weeks.

Loan indices mixed

IHS Markit’s iBoxx loan indices were mixed on Wednesday, with the Leveraged Loan indexes (MiLLi) closing out the day unchanged and the Liquid Leveraged Loan indices (LLLi) closing out the day down 0.01%.

Month to date, the MiLLi is down 0.14% and year to date it is up 3.9%, and the LLLi is down 0.59% month to date and up 3.84% year to date.

Average secondary market bids in the U.S. on Wednesday were 90.94, up 0.01% from the previous day and down 1.02% year to date.

According to the IHS Markit data, some of the top advancers on Wednesday were CBS Radio/Entercom Media’s December 2019 covenant-lite term loan at 48.5, up from 46.08, Naked Juice/Tropicana’s January 2022 covenant-lite term loan at 91.17, up from 88.28, and Wheel Pros’ May 2021 covenant-lite term loan at 61.88, up from 59.92.

Some top decliners on Wednesday were Heritage Power’s July 2019 term loan at 22.88, down from 29, Strategic Materials’ November 2017 covenant-lite term loan at 72.5, down from 75.5, and Air Methods’ April 2017 covenant-lite term loan B at 46.44, down from 48.06.

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