Gates Global, AssuredPartners break; Spirit AeroSystems, Howden term loans trade higher

By Sara Rosenberg

New York, Nov. 9 – Gates Global lowered the spread on its term loan B and tightened the original issue discount, and AssuredPartners Inc. launched an incremental term loan B in the morning and modified the issue price in the afternoon, and then both of these deals broke for trading on Wednesday.

Additionally, Spirit AeroSystems Inc.’s term loan B headed higher in the secondary market from its recent break levels and Howden’s term loan strengthened following news that the company is being acquired by Chart Industries Inc.

In more happenings, DXP Enterprises Inc. came to market with an incremental term loan B and an amendment to its existing term loan B.

Gates flexes, frees

Gates Global trimmed pricing on its $575 million seven-year senior secured covenant-lite term loan B (Ba3/B+) to SOFR plus 350 basis points from talk in the range of SOFR plus 375 bps to 400 bps and adjusted the original issue discount to 97 from 96, a market source remarked.

As before, the term loan has a 0.5% floor, 101 soft call protection for six months and 0 bps CSA.

Commitments continued to be due at noon ET on Wednesday and the term loan broke for trading in the afternoon, with levels quoted at 97¾ bid, 98½ offered, another source added.

Citigroup Global Markets Inc., Barclays, CIBC, Credit Suisse Securities (USA) LLC, Goldman Sachs Bank USA, HSBC Securities (USA) Inc., Morgan Stanley Senior Funding Inc. and JPMorgan Chase Bank are leading the deal. Co-managers are BofA Securities Inc., Blackstone, KeyBanc Capital Markets, PNC Capital Markets, RBC Capital Markets, Santander and Bank of Nova Scotia.Credit Suisse is the administrative agent.

The new debt will refinance the company’s existing euro term loan B and pay related fees and expenses.

Closing is expected during the week of Nov. 14.

Gates is a Denver-based manufacturer of application-specific fluid power and power transmission solutions.

AssuredPartners tightens, breaks

AssuredPartners launched on a 10 a.m. ET lender call a $500 million incremental covenant-lite term loan B (B2/B) due Feb. 13, 2027 at talk of SOFR plus 425 bps with a 0.5% floor, an original issue discount of 95 to 96, 101 soft call protection for six months and 0 bps CSA, according to a market source.

After a 2 p.m. ET commitment deadline, the discount on the term loan was tightened to 96.5 and a recommitment deadline was set for 3:45 p.m. ET, the source said.

The incremental term loan then made its way into the secondary market in the evening, with levels quoted at 97 bid, 97½ offered, a trader added.

Morgan Stanley Senior Funding Inc. is the left lead on the deal. BofA Securities Inc. is the agent.

The loan will be used for general corporate purposes, including to fund near-term acquisition activity and pay fees and expenses related to the offering.

Closing is expected on Nov. 16.

AssuredPartners is a Lake Mary, Fla.-based insurance brokerage firm.

Spirit gains ground

Spirit AeroSystems’ $594 million senior secured five-year covenant-lite first-lien term loan B (Ba2/BB-) rose to 98¼ bid, 98¾ offered on Wednesday from the 97½ bid, 98½ offered levels seen upon its freeing up for trading late Tuesday, according to a trader.

Pricing on the term loan is SOFR plus 450 bps with a 0.5% floor and it was sold at an original issue discount of 97. The debt has 101 soft call protection for six months and 0 bps CSA.

During syndication, the discount on the term loan firmed at the tight end of the 96 to 97 talk.

Morgan Stanley Senior Funding Inc. and BofA Securities Inc. are leading the deal. BofA is the administrative agent.

Proceeds will be used with $900 million of senior secured notes to refinance an existing term loan B, to tender for all $500 million of the company’s 5½% senior secured first-lien notes due 2025, to redeem 3.95% senior notes due 2023 and for general corporate purposes.

Closing is expected on Nov. 23.

Spirit AeroSystems is a Wichita, Kan.-based designer and builder of aerostructures for both commercial and defense customers.

Howden moves higher

Howden’s term loan was quoted at 99½ bid, par ¼ offered on Wednesday, up from 98 bid, 98¾ offered on Tuesday, as the company announced that it is being purchased by Chart Industries for $4.4 billion from KPS Capital Partners LP, according to a trader.

To support the transaction, Chart Industries has a commitment for a $3.375 billion 364-day senior bridge loan, but the company plans to pursue a long-term financing structure that is expected to include a combination of term loans, senior secured notes and unsecured notes.

JPMorgan Chase Bank and Morgan Stanley Senior Funding Inc. provided the debt commitment.

Closing on the acquisition is expected in the first half of 2023, subject to regulatory approvals and other customary conditions.

Howden is a U.K.-based provider of mission critical air and gas handling products and services. Chart Industries is a Ball Ground, Ga.-based manufacturer of highly engineered equipment servicing multiple applications in the energy and industrial gas markets.

DXP holds call

Back in the primary market, DXP Enterprises surfaced in the morning with plans to hold a lender call at 2 p.m. ET to launch a fungible $125 million incremental term loan B due Dec. 23, 2027 talked at SOFR plus 525 bps with a 1% floor and an original issue discount of 93 to 94, a market source said.

The incremental term loan and the existing term loan B are getting 101 soft call protection for six months.

Goldman Sachs Bank USA is leading the deal that will be used to add cash to balance sheet to pre-fund tuck-in acquisition targets under letters of intent or committed, and to repay borrowings under an existing ABL revolver due 2027.

Commitments are due at 2 p.m. ET on Tuesday, the source continued.

DXP amendment

Along with the add-on, DXP launched an amendment to its existing term loan B to change pricing to SOFR plus 525 bps with a 1% floor from Libor plus 475 bps with a 1% floor, increase the free and clear basket under the accordion to $85 million from $52.5 million, revise the cap on cash netting to $200 million from $150 million, and modify the ratio test for unlimited distributions to 4x net secured leverage from 3.75x, the source added.

A consent fee of 50 bps will be payable to each existing lender that consents to the proposed amendments, other than the amendments solely to convert Libor to SOFR and/or increase the applicable margin, based on the principal amount of the existing term loan held by each existing lender.

Pro forma for the transaction, the term loan B will total $449 million.

DXP is a Houston-based distributer of maintenance, repair and operating products, equipment and services and provider of integrated pumping solutions and supply chain management services.

Fund flows

In other news, actively managed loan fund flows on Tuesday were negative $55 million and loan ETFs were positive $38 million, according to market sources.

Loan indices rise

IHS Markit’s iBoxx loan indices were higher on Tuesday, with the Leveraged Loan indexes (MiLLi) closing out the day up 0.16% and the Liquid Leveraged Loan indices (LLLi) closing out the day up 0.18%.

Month to date, the MiLLi is up 0.62% and year to date its down 2.16%. The LLLi is up 0.71% month to date and down 2.75% year to date.

Average secondary market bids in the U.S. on Tuesday were 92.42, up 0.04% from the previous day and down 4.57% year to date.

According to the IHS Markit data, some of the top advancers on Tuesday were Harland Clarke/Vericast’s August 2021 covenant-lite term loan at par, up from 69, National CineMedia’s June 2018 term loan B at 39.71, up from 37.89, and Loyalty Ventures’ November 2021 covenant-lite term loan B at 35.20, up from 33.60.

Some top decliners on Tuesday were Convergeone’s January 2019 covenant-lite term loan at 57.50, down from 64.16, Air Methods’ April 2017 covenant-lite term loan B at 58.17, down from 63.25, and MultiPlan’s August 2021 covenant-lite term loan B at 88.95, down from 92.66.

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