Garda World contemplates term B downsizing to $740 million-equivalent

By Sara Rosenberg

New York, April 24 – Garda World Security Corp. may reduce its $980 million-equivalent seven-year senior secured covenant-light term loan B by up to $240 million to $740 million-equivalent depending on if bondholders decline a redemption offer, according to a market source.

In connection with the change of control triggered by Rhône Capital’s acquisition of a majority equity interest in Garda, holders of the senior notes are being offered a 101 change-of-control offer. Holder of up to $357 million of the existing bonds may choose to decline the offer and roll into the new capital structure.

The credit agreement will permit remaining existing senior notes to be refinanced in the future with new term loans up to the amount of any downsize, plus the amount of any premiums, fees and accrued interest in connection with the refinancing, the source said.

Any reduction of the new term loan will be done through a par prepayment on the closing date, expected to occur on or about May 15, and term loan lenders will retain the difference between the original issue discount and par on any prepaid amounts.

Along with the potential term loan reduction, the company is contemplating a downsizing of its new senior notes offering by $130 million to $500 million from $630 million.

The term loan includes a U.S. dollar and Canadian dollar tranche, with the U.S. piece talked at Libor plus 350 basis points with a 1% Libor floor and an original issue discount of 99 to 99.5, and the Canadian piece talked at CDOR plus 425 bps with a 1% floor and a discount of 99 to 99.5.

Both term loan tranches have 101 soft call protection for six months.

The company’s credit facilities also include a $240 million revolver.

Barclays, Citigroup Global Markets Inc., Macquarie Capital (USA) Inc., TD Securities (USA) LLC and Societe Generale are the bookrunners on the deal.

Commitments are due at 5 p.m. ET on Tuesday, the source added.

Proceeds will be used to help fund a refinancing and recapitalization.

If the term loan and the bonds are downsized by the full amount, net secured leverage will be 2.9 times, down from 3.8 times under the original structure, and net total leverage will be 6.2 times, down from 6.3 times under the original structure.

Garda is a Montreal-based provider of cash logistics and security solutions.

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