Speedcast loan weakens in trading post earnings, acquisition news; Refinitiv sets launch

By Sara Rosenberg

New York, Aug. 28 – Speedcast International Ltd.’s term loan softened in the secondary market on Tuesday after the company announced financial results for the six-month period ended June 30, lowered full year EBITDA guidance and outlined plans to use debt for the purchase of Globecomm Systems Inc.

In more happenings, firm timing surfaced on the launch of Refinitiv’s U.S. and euro term loan B debt.

Speedcast retreats

Speedcast’s term loan fell to 99¼ bid, par offered from par 1/8 bid, par 5/8 offered after the company released financials and disclosed that it would be increasing the size of its term loan, according to a trader.

For the first half of the year, the company reported group revenue of $304.9 million, up from $246.3 million in the first half of 2017.

Underlying EBITDA for the six month period was $60.4 million, up from $53.2 million in the comparable timeframe last year.

Profit for the half year was $573 million, or $0.22 per diluted share, versus loss in the first half of 2017 of $5.1 million, or $2.17 per diluted share.

And, net debt increased to $430 million at June 30 from $388 million at Dec. 31, 2017 due to investment in growth including debt refinancing costs and $20 million for the UltiSat acquisition earn-out.

Regarding guidance, the company said in a presentation that following first half performance and a detailed bottom-up reforecast, full year 2018 outlook for underlying EBITDA was revised to a range of $135 million to $145 million. Prior underlying EBITDA guidance was in the area of $155 million.

Speedcast adding debt

Speedcast also revealed on Tuesday intentions to get a $175 million add-on senior secured term loan (BB-) due 2025.

Proceeds from the loan will be used to finance the acquisition of Globecomm Systems Inc. from HPS Investment Partners LLC and Tennenbaum Capital Partners LLC for an estimated net purchase consideration of $135 million, including expected purchase price adjustments, and to pay down some revolver drawings.

Closing on the acquisition is expected in the fourth quarter, subject to regulatory approvals and other customary conditions.

Speedcast is an Australia-based provider of remote communication and IT solutions. Globecomm is a Hauppauge, N.Y.-based provider of remote communications and multi-network infrastructure to government, maritime and enterprise sectors.

Refinitiv on deck

Refinitiv set a bank meeting in London for Sept. 4 and a bank meeting at 11 a.m. ET in New York for Sept. 5 to launch its previously announced $5.5 billion seven-year covenant-light term loan B and $2.5 billion equivalent euro seven-year covenant-light term loan B, a market source said.

Talk had been that the bank meeting would occur next week and that Sept. 5 was the potential date of the U.S. launch, but firm timing was unavailable until now.

The company is also expected to get a $750 million revolver.

Bank of America Merrill Lynch, J.P. Morgan Securities LLC, Citigroup Global Markets Inc., Wells Fargo Securities LLC, Morgan Stanley Senior Funding Inc., Goldman Sachs Bank USA, UBS Investment Bank, Credit Suisse Securities (USA) LLC, HSBC Securities (USA) Inc., Deutsche Bank Securities Inc., Barclays, RBC Capital Markets and Sumitomo are leading the deal.

Refinitiv being acquired

Proceeds from the new bank debt and $5.5 billion equivalent in notes will be used to help fund the acquisition of a 55% stake in Thomson Reuters’ Financial & Risk business, which will be renamed Refinitiv, by Blackstone, Canada Pension Plan Investment Board and GIC.

Thomson Reuters will receive about $17 billion in gross proceeds when the transaction closes, subject to purchase price adjustments, and will retain a 45% equity stake in the company.

Closing is expected on Oct. 1.

Refinitiv is a data and financial technology platform.

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