Galderma term loan rises with private placement news; Dave & Buster’s changes emerge

By Sara Rosenberg

New York, June 28 – Galderma’s first-lien term loan headed higher in the secondary market on Wednesday in reaction to recent news that the company is doing a private placement of newly issued shares.

Meanwhile, in the primary market, Dave & Buster’s Inc. increased the size of its term loan B and firmed the original issue discount at the tight end of guidance after accelerating the commitment deadline in the morning.

Galderma gains

Galderma’s first-lien term loan rose to 99 bid, par offered on Wednesday from 98 bid, 98½ offered on Tuesday as investors reacted to the company’s announcement from earlier this week of a roughly $1 billion private placement of newly issued shares, a trader remarked.

The private placement is being done with a group consisting of current shareholders, new investors and management and is expected to close in the coming weeks.

Proceeds from the private placement will be used to strengthen the Switzerland-based skincare company’s balance sheet and to further accelerate its organic growth momentum fueled by its integrated dermatology strategy.

The company also said that an initial public offering remains the likely next step in Galderma’s ambition to become the leading dermatology company in the world.

On Tuesday, Fitch Ratings revised the company’s outlook to positive from stable while affirming the long-term issuer default rating at B and senior secured rating at B+.

Fitch said that the outlook revision reflects Galderma’s recent strong financial performance and cost management, which together with its announced private placement aimed at partial debt repayment, will lead to its EBITDA gross leverage falling well below Fitch’s positive sensitivity of 7x by the end of 2023.

Dave & Buster’s revised

Moving to the primary market, Dave & Buster’s announced in the morning that it moved up the commitment deadline for its covenant-lite term loan B (B1/B) due June 2029 to noon ET on Wednesday from 5 p.m. ET on Wednesday and, in the afternoon, the loan was upsized to $900 million from $844 million and the original issue discount finalized at 99, the tight end of the 98.5 to 99 talk, according to a market source.

Following the updates, a recommitment deadline was set at 5 p.m. ET on Wednesday, the source added.

As before, the term loan is priced at SOFR+10 basis points CSA plus 375 bps with a 0.5% floor, and has 101 soft call protection for six months.

Deutsche Bank Securities Inc., JPMorgan Chase Bank, BMO Capital Markets, Wells Fargo Securities LLC, Truist, Capital One and Fifth Third are leading the deal that will be used to refinance an existing $844 million term loan B due June 2029 priced at SOFR+10 bps CSA plus 500 bps with a 0.5% floor and, due to the upsizing, for general corporate purposes.

Dave & Buster’s is a Coppell, Tex.-based owner and operator of entertainment and dining venues.

Fund flows

In other news, actively managed loan fund flows on Tuesday were negative $27 million and loan ETFs were negative $21 million, market sources said.

Actively managed high-yield fund flows on Tuesday were negative $59 million and high-yield ETFs were positive $109 million, sources added.

Loan indices rise

IHS Markit’s iBoxx loan indices were stronger on Tuesday, with the Leveraged Loan indexes (MiLLi) closing out the day up 0.09% and the Liquid Leveraged Loan indices (LLLi) closing out the day up 0.07%.

Month to date, the MiLLi is up 1.82% and year to date it is up 5.79%, and the LLLi is up 1.78% month to date and up 5.69% year to date.

Average secondary market bids in the U.S. on Tuesday were 91.43, up 0.03% from the previous day and down 0.49% year to date.

According to the IHS Markit data, some of the top advancers on Tuesday were United Road Services’ September 2017 covenant-lite term loan B at 33.6, up from 31.21, EyeCare Partners’ August 2022 incremental term loan at 73.25, up from 71, and VeriFone’s August 2018 covenant-lite term loan at 94.06, up from 91.58.

Some top decliners on Tuesday were Envision Healthcare/Amsurg’s July 2022 first out covenant-lite term loan at 108.5, down from 113, Unifrax’s December 2018 U.S. covenant-lite term loan B at 88.81, down from 90.83, and LogMeIn’s August 2020 covenant-lite term loan B at 62.5, down from 63.58.

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