AmWINS breaks above OID; Protection 1, Novolex changes surface; American Airlines sets talk

By Sara Rosenberg

New York, April 18 – AmWINS Group Inc.’s add-on first-lien term loan made its way into the secondary market on Monday, with the debt seen trading above its original issue discount.

Meanwhile, in the primary market, Protection 1 (Prime Security Services Borrower LLC) tightened spread and original issue discount on its term loan as the debt saw a lot of demand from lenders, and Novolex increased the size of its incremental term loan.

Also, American Airlines Group Inc. came out with price talk on its term loan B, and timing emerged on the launch of Brocade’s credit facility.

AmWINS frees up

AmWINS Group’s fungible $40 million add-on first-lien term loan due Sept. 6, 2019 began trading as well, with levels quoted at par bid, 100˝ offered, a trader remarked.

Pricing on the add-on term loan is Libor plus 425 bps with a 1% Libor floor, in line with existing term loan pricing, and the new debt was sold at an original issue discount of 99.5.

During syndication, the add-on term loan was upsized from $30 million.

Credit Suisse Securities (USA) LLC is leading the debt that will be used to fund an acquisition.

AmWINS is a Charlotte, N.C.-based specialty insurance broker.

Protection 1 revises deal

Switching to the primary market, Protection 1 trimmed pricing on its $1,555,000,000 six-year covenant-light term loan to Libor plus 450 bps from talk of Libor plus 475 bps to 500 bps, moved the original issue discount to 99 from 98 and eliminated the MFN sunset, according to a market source.

Additionally, the definition of consolidated EBITDA was changed to permit add backs realizable within 18 months and not to exceed 20% of consolidated EBITDA from unlimited, the source said.

The term loan still has a 1% Libor floor and 101 soft call protection for one year.

The company’s $1.81 billion incremental senior secured credit facility (Ba2/BB-) also includes a $255 million five-year revolver.

Recommitments are due by 5 p.m. ET on Tuesday, the source added.

Protection 1 leads

Barclays, Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and RBC Capital Markets LLC are leading Protection 1’s credit facility.

Proceeds from the credit facility will be used with $3.14 billion second-priority senior secured notes due 2023, $750 million of preferred securities, $3,575,000,000 of equity, $906 million of rollover equity and cash on hand to fund the buyout of ADT Corp.

Apollo Funds is buying ADT for $42 per share in cash and merging ADT with Protection 1, which is currently owned by Apollo. When combined with Protection 1, the aggregate transaction value is about $15 billion.

Closing is expected by June, subject to the conclusion of the applicable antitrust waiting periods in the United States and Canada, ADT stockholder approval and other customary conditions.

Total leverage is 3.6 times, and first-lien leverage is 2.3 times.

Protection 1 is a full-service business and home security company. ADT is a Boca Raton, Fla.-based provider of monitored security, interactive home and business automation and related monitoring services.

Novolex ups size

Novolex lifted its fungible incremental term loan to $475 million from $295 million and its subordinated debt financing to $240 million from $190 million, a market source said.

Furthermore, 101 soft call protection for one year was added to the incremental term loan and to the company’s existing term loan, versus no call protection previously, the source continued.

As before, the incremental term loan is priced at Libor plus 500 bps with a 1% Libor floor and an original issue discount of 99.

Including the incremental loan, the company’s term loan will total about $1,344,000,000.

Antares Capital and CPPIB are leading the deal.

Novolex repaying debt

Due to the upsizing of the incremental term loan and the subordinated debt, the company is repaying its existing $230 million second-lien term loan in full along with a 101 call premium.

Original proceed from the new debt are still being used to fund the acquisition of the Heritage Bag Co., a Roanoke, Texas-based producer of institutional can liners in North America.

An amendment is needed for the proposed changes to the financing, the source remarked.

Lenders are being offered a 12.5 bps consent fee.

Commitments and signature pages are due by 5 p.m. ET on Wednesday, the source added.

Novolex is a Hartsville, S.C.-based provider of paper and plastic flexible packaging products.

American Airlines reveals talk

Also in the primary market, American Airlines held its lender call on Monday afternoon, launching its $750 million seven-year term loan B (Ba1/BB+) with talk of Libor plus 275 bps with a 0.75% Libor floor, an original issue discount of 99 and 101 soft call protection for six months, according to a market source.

Commitments are due at 5 p.m. ET on April 26, the source said.

Barclays, Bank of America Merrill Lynch, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman Sachs Bank USA, J.P. Morgan Securities LLC, Morgan Stanley Senior Funding Inc., BNP Paribas Securities Corp., Credit Agricole, ICBC and US Bank are leading the loan that will be used to repay the company’s $588 million term loan B-2 due in 2016, to pay related fees and expenses and for general corporate purposes.

Net debt to EBITDAR is 2.4 times, the source added.

American Airlines is a Fort Worth-based airline company.

McGraw-Hill launches

McGraw-Hill Global Education Holdings LLC launched its $1,305,000,000 six-year first-lien covenant-light term loan with a morning bank meeting, and call protection on the debt was revealed to be a 101 soft call for six months, a market source remarked.

As previously reported, the term loan is talked at Libor plus 475 bps with a 1% Libor floor and an original issue discount of 99.

The company’s $1,655,000,000 credit facility (Ba3/BB-) also provides for a $350 million five-year revolver.

Commitments are due on April 28.

Credit Suisse Securities (USA) LLC, Morgan Stanley Senior Funding Inc., BMO Capital Markets, Barclays, Goldman Sachs Bank USA, Jefferies Finance LLC, RBC Capital Markets and Wells Fargo Securities LLC are leading the deal.

McGraw-Hill recapitalizing

Proceeds from McGraw-Hill’s credit facility, $670 million of senior unsecured debt and cash on hand will be used to refinance existing debt and fund a $300 million dividend. Also, the transaction will merge McGraw-Hill School Education into the McGraw-Hill Global Education credit group.

Pro forma for the financing, total OpCo debt will be 3.8 times and OpCo net debt will be 3.1 times, according to an 8-K filed with the Securities and Exchange Commission. Total debt, including HoldCo, will be 4 times and total net debt will be 4.8 times.

The company expects this transaction to simplify its capital structure in advance of an expected initial public offering. Proceeds from the IPO would be used to prepay HoldCo notes.

McGraw-Hill is a New York-based provider of education materials.

Brocade timing surfaces

Brocade set a bank meeting in San Jose, Calif., for Thursday afternoon to launch its previously announced $900 million five-year senior secured credit facility (BB+) that consists of a $100 million revolver and an $800 million term loan A, a market source said.

Opening pricing on the revolver and term loan A is talked at Libor plus 150 bps, the source added.

Wells Fargo Securities LLC, Deutsche Bank Securities Inc. and SunTrust Robinson Humphrey Inc. are leading the deal that will be used with cash on hand to fund the acquisition of Ruckus Wireless Inc. for $6.45 in cash and 0.75 of a share of Brocade common stock for each share of Ruckus common stock. The transaction values Ruckus at about $1.5 billion.

Closing is expected in Brocade’s third fiscal quarter of 2016, subject to customary conditions, including reviews antitrust regulators and the tender of a majority of the outstanding shares of Ruckus’ common stock.

Brocade is a San Jose, Calif.-based provider of networking solutions. Ruckus is a Sunnyvale, Calif.-based manufacturer of wireless networking equipment.

Evoqua closes

In other news, Evoqua Water Technologies (EWT Holdings III Corp.) completed its acquisition of Neptune Benson, according to a news release.

To help fund the transaction, Evoqua got a non-fungible $185 million tack-on first-lien term loan (B2/B) due Jan. 15, 2021 priced at Libor plus 450 bps with a 1% Libor floor, and sold at an original issue discount of 99. The debt has 101 soft call protection for one year.

During syndication, pricing on the loan was reduced from talk of Libor plus 475 bps to 500 bps, and the discount tightened from talk of 98 to 98.5.

Credit Suisse Securities (USA) LLC, Morgan Stanley Senior Funding Inc. and RBC Capital Markets led the deal.

Evoqua is a Warrendale, Pa.-based provider of equipment and services for water treatment. Neptune is a manufacturer of water filtration and disinfection products for the recreational, industrial and municipal water markets.

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