Micro Focus obtains upsized $650 million and €600 million term loans

By Rebecca Melvin

New York, May 29 – Micro Focus International plc priced and allocated upsized $650 million and €600 million five-year senior secured term loans B (B1//BB), according to a 6-K filing with the Securities and Exchange Commission.

The sizes were initially talked at $400 million and €400 million.

Final pricing of the U.S. term loan is Libor plus 425 basis points with a 1% Libor floor and an original issue discount of 2.5%, which was tight compared to talk for pricing of Libor plus 450 bps.

Final pricing of the euro term loan is Euribor plus 450 bps with a 0% floor and a discount of 3.0%, which was in line with talk.

The term loans are non-callable for one year, then at 102 in year two.

J.P. Morgan Securities LLC is the lead on the deal. Joint bookrunners are HSBC, NatWest, Barclays, BofA Securities Inc. and Goldman Sachs.

Following completion of the transaction the average maturity of Micro Focus’s debt capital structure has been extended to 4.2 years from 3.2 years. The next tranche of term loans due for repayment is in June 2024.

As previously reported, the proceeds of the new loans will be used to partly refinance an existing senior secured term loan B due November 2021 and pay associated fees and expenses.

Other funds for the refinancing will come from $150 million of cash on hand.

The company was out with a refinancing earlier in the year, but that transaction was pulled in March due to adverse market conditions.

Micro Focus is a Newbury, England-based enterprise software company.

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