Global Eagle ups first-lien loan to $500 million, removes second-lien

By Sara Rosenberg

New York, Dec. 21 – Global Eagle Entertainment Inc. upsized its first-lien term loan to $500 million from $460 million and cancelled plans for a $125 million eight-year second-lien term loan, according to a market source.

Also, pricing on the first-lien term loan was increased to Libor plus 600 basis points from Libor plus 525 bps and the original issue discount was revised to 97 from talk of 98 to 99, the source said.

Furthermore, the first-lien term loan is now non-callable for one year, then has hard call protection of 102 in year two and 101 in year three, instead of having 101 soft call protection for six months, the maturity was shortened to six years from seven years, and the 18-month MFN sunset was removed, setting the 50 bps MFN for the life of the deal.

The excess cash flow sweep was increased to 75% with step-downs from 50%. The company is still required to make mandatory prepayments from 100% of cash proceeds from non-ordinary course asset and dispositions subject to customary reinvestment rights, and 100% of cash proceeds from debt issuances other than permitted debt.

Additionally, the incremental allowance was changed to the sum of $50 million and an unlimited amount subject to, with respect to any first-lien incremental facility, closing date first-lien net leverage, with respect to any secured incremental facility, 4 times secured net leverage, and, with respect to any unsecured incremental facility 4.75 times total net leverage. Originally, the incremental was the sum of $75 million and an unlimited amount subject to, with respect to any first-lien incremental facility, closing date first-lien net leverage, with respect to any secured incremental facility, closing date secured net leverage, and, with respect to any unsecured incremental facility 5 times total net leverage.

Another change was that add-backs for cost savings, operating expense reductions and synergies were capped to 25% of consolidated EBITDA and the realization period for such transactions and initiatives was set to 18 months, from no cap and 24 months, the source continued.

As before, the first-lien term loan has a 1% Libor floor.

Covenants include a maximum consolidated first-lien net leverage ratio of 4.25 times, stepping down to 4 times on Sept. 30, 2019 and 3.75 times on Sept. 30, 2020, tested quarterly commencing with the first full fiscal quarter to occur after the closing date.

The company’s now $585 million senior secured credit facility, down from $670 million, still includes an $85 million five-year revolver.

The eliminated second-lien term loan had been talked at Libor plus 950 bps with a 1% Libor floor, a discount of 98, and hard call protection of 102 in year one and 101 in year two.

Citigroup Global Markets Inc. and Macquarie Capital (USA) Inc. are the joint lead arrangers on the deal.

Commitments were scheduled to be due at 5 p.m. ET on Wednesday.

Proceeds will be used to refinance a roughly $265 million first-lien term loan, a roughly $92 million second-lien term loan and about $39 million in revolver borrowings at Emerging Markets Communications LLC, and for working capital, capital expenditures, acquisitions, investments and general corporate purposes.

The reduced proceeds raised from the credit facility due to the removal of the second-lien term loan will decrease cash to the balance sheet, the source added.

Global Eagle is a Marina Del Rey, Calif.-based provider of satellite-based connectivity and media.

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