SI lower after downgrade; Internet Brands restructures; BroadStreet, Kenan, MRC set talk

By Sara Rosenberg

New York, April 24 – SI Group (SK Mohawk Holdings Sarl) saw its term loan soften in trading on Monday on the back of a ratings downgrade by S&P Global Ratings, and Getty Images Holdings, Inc.’s term loan held steady following news that Trillium Capital LLC has offered to purchase the company as the debt was already trading wrapped around par.

Meanwhile, in the primary market, Internet Brands modified its term loan transaction to an amendment and extension from a refinancing, BroadStreet Partners Inc., Kenan Advantage Group Inc. and MRC Global Inc. released price talk in connection with their lender calls, and Copeland joined this week’s new issue calendar.

SI Group retreats

SI Group’s term loan dropped in the secondary market to 82 bid, 83 offered on Monday from 86 bid, 87 offered on Friday as investors reacted to S&P’s Friday announcement that it cut the company’s issuer credit rating to CCC+ from B- and senior secured credit facilities to CCC+, according to a trader. The ratings outlook is negative.

S&P said the change in ratings follows weaker-than-expected operating performance in 2022 and the expectation that 2023 earnings, profitability, and cash flows will be below previous estimations.

SI Group is a Schenectady, N.Y.-based developer and manufacturer of performance additives and intermediates.

Getty steady

Getty Images’ term loan was quoted at 99¾ bid, par ½ offered on Monday, unchanged from Friday, as news of a buyout offer had no impact on the debt that’s already trading in the par context, a trader remarked.

On Monday, Trillium Capital announced a non-binding proposal to acquire Getty Images for $10 per share in cash.

The binding proposal is contingent on, among other things, the immediate engagement by the board of directors of Getty, completion of satisfactory due diligence, obtaining satisfactory financing arrangements, entering a satisfactory purchase and sale contract, filing and completion of all regulatory matters related to the proposal and approval of shareholders.

Getty Images is a Seattle-based visual content creator and marketplace.

Internet Brands reworked

Moving to the primary market, Internet Brands revised its $4.728 billion term loan (B1/B) to an amendment and extension proposal that would extend the term loan maturity to five years from close, from a new $4.728 billion five-year term loan that would refinance the existing term loan due 2024, according to a market source.

Also, some additional changes were made to documentation, including to MFN and restricted payments.

Talk on the term loan remained at SOFR plus 425 basis points with a 0.5% floor, an original issue discount of 97.5 and 101 soft call protection for six months.

The change to an amendment and extension leaves the company the ability to have a non-extended stub tranche left if the entire term loan is not extended, the source continued.

The term loan was sized at $4.741 billion at launch, but the adjusted $4.728 billion size takes into account a March amortization payment.

Commitments were due end of day on Monday, the source added.

RBC Capital Markets and KKR Capital Markets are leading the deal.

Internet Brands is an El Segundo, Calif.-based provider of software as a service and traffic driven marketplace/media offerings across health, legal, dental and media verticals.

BroadStreet details surface

BroadStreet Partners held its lender call at 2 p.m. ET, launching a $735 million incremental term loan B-3 (B) due January 2029 at talk of SOFR plus 400 bps to 425 bps with a 0% floor, an original issue discount of 98 and 101 soft call protection for six months, a market source said.

Commitments are due at noon ET on May 2, the source added.

RBC Capital Markets and BMO Capital Markets are leading the deal that will be used to support a new core agency partnership.

BroadStreet is a Columbus, Ohio-based insurance broker.

Kenan sets talk

Kenan Advantage Group came out with talk of SOFR+CSA plus 400 bps with a 0.75% floor, an original issue discount of 98.5 and 101 soft call protection for six months on its non-fungible $250 million incremental first-lien term loan due 2026 that launched with a call in the afternoon, according to a market source.

CSA is ARRC standard of 11.448 bps one-month rate, 26.161 bps three-month rate and 42.826 bps six-month rate.

Commitments are due at 2 p.m. ET on May 1, the source added.

KeyBanc Capital Markets LLC, Barclays, Citizens, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., CIBC, Fifth Third, ING, MUFG and Regions Capital are leading the deal, which will be used with cash on hand to refinance a $300 million second-lien term loan due 2027.

Kenan Advantage is a North Canton, Ohio-based provider of liquid bulk transportation services to the fuels, chemicals, liquid foods and merchant gas markets.

MRC holds call

MRC Global emerged in the morning with plans to hold a lender call at 1 p.m. ET to launch a $300 million five-year first-lien term loan B (B3/B) talked at SOFR+10 bps CSA plus 400 bps with a 0.5% floor, an original issue discount of 98.5 to 99 and 101 soft call protection for six months, a market source remarked.

Commitments are due at 5 p.m. ET on May 2, the source added.

JPMorgan Chase Bank is leading the deal that will be used to refinance an existing $295 million term loan B due September 2024 and pay related fees and expenses.

MRC is a Houston-based distributor of pipe, valves and fittings and other infrastructure products and services to diversified energy and industrial end markets.

Copeland on deck

Copeland set a lender call for 10 a.m. ET on Tuesday to launch an up to $2.75 billion term loan B, according to a market source.

RBC Capital Markets and Barclays are leading the deal that will be used with other secured debt to help fund the acquisition by Blackstone of a majority stake in Emerson Electric Co.’s Climate Technologies business (Copeland) for an aggregate purchase price of $14 billion.

Emerson will receive upfront, pre-tax cash proceeds of about $9.5 billion and a note of $2.25 billion at close, and retain 45% common equity ownership in the new standalone joint venture.

In the October press release, it was said that the cash consideration would be funded by $5.5 billion of fully committed debt financing ($6.2 billion inclusive of an unfunded ABL facility), and that ABL revolver and term loan A portion of the debt financing was being led by RBC, Wells Fargo and SMBC.

Additionally, there will be $4.4 billion of equity used for the transaction.

Closing is expected in the first half of this year, subject to regulatory approvals and customary conditions.

Copeland is a manufacturer of mission critical, highly engineered heating, ventilation, air conditioning and refrigeration components.

Fund flows

In other news, actively managed loan fund flows on Friday were negative $67 million and loan ETFs were negative $47 million, market sources said.

Outflows for loan funds year to date total $12.2 billion, sources added.

Loan indices rise

IHS Markit’s iBoxx loan indices were stronger on Friday, with the Leveraged Loan indexes (MiLLi) closing out the day up 0.04% and the Liquid Leveraged Loan indices (LLLi) closing out the day up 0.03%.

Month to date, the MiLLi is up 0.85% and year to date it is up 3.93%, and the LLLi is up 1.04% month to date and up 4.37% year to date.

Average secondary market bids in the U.S. on Friday were 91.58, down 0.02% from the previous day and down 0.33% year to date.

According to the IHS Markit data, some of the top advancers on Friday were U.S. Renal Care’s June 2019 term loan B at 67.42, up from 65.31, Tutor Perini’s August 2020 covenant-lite term loan at 88.17, up from 86.06, and Genesis Care’s March 2020 U.S. covenant-lite term loan B at 28.42, up from 27.75.

Some top decliners on Friday were Rackspace Hosting’s February 2021 covenant-lite term loan B at 43.38, down from 44.5, Carrols Restaurant’s April 2019 covenant-lite term loan at 91.88, down from 94, and CBS Radio/Entercom Media’s December 2019 covenant-lite term loan at 59.5, down from 60.5.

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