Applied Systems adds new money first-lien term loan to structure

By Sara Rosenberg

New York, Nov. 18 – Applied Systems Inc. added a new money covenant-lite first-lien term loan due September 2026 to its amend and extend transaction to repay non-extended second-lien term loan debt and a portion of its non-extended first-lien term loan with no increase in total debt outstanding, according to a market source.

The new money first-lien term loan was launched on Friday morning with a size of $190 million but was later increased to $215 million, and the funds will repay $174.1 million of non-extended first-lien term loan borrowings and $40.9 million of non-extended second-lien term loan borrowings.

The new money first-lien term loan is offered with an original issue discount of 99.5, the source said.

Final sizes on the company’s extended tranches emerged in the afternoon, with the extended covenant-lite first-lien term loan due September 2026 sized at $1,546,340,000, including the $215 million of new money, and the extended covenant-lite second-lien term loan due September 2027 sized at $564.71 million, the source continued.

At launch, the extended first-lien term loan was described as up to $1.79 billion, with a minimum size of $895 million, and the extended second-lien term loan was described as up to $606 million.

Also, pricing on the extended second-lien term loan was reduced to SOFR plus 675 basis points from SOFR plus 700 bps.

The new money first-lien term loan and extended first-lien term loan are priced at SOFR plus 450 bps with a 0.5% floor, in line with where the extended first-lien term loan launched on Nov. 15.

As before, the extended first- and second-lien term loans are offered with a 50 bps extension fee, the first-lien term loan debt has 101 soft call protection for six months, the second-lien term loan debt has a 0.75% floor and 101 hard call protection for one year, and the loans have no CSA.

The company is still getting an extended $80 million revolver due June 2026.

Nomura Securities, Jefferies LLC and Macquarie Capital (USA) Inc. are the arrangers on the deal.

Recommitments were scheduled to be due at 11:30 a.m. ET on Friday, the source added.

Proceeds will be used to extend the existing revolver from June 2024, extend a portion of the existing first-lien term loan from September 2024, and extend the existing second-lien term loan from September 2025 and change pricing from Libor plus 550 bps with a 0.75% floor.

The $284.29 million non-extended first-lien term loan remains priced at Libor plus 300 bps with a 0.5% floor and has no call protection.

Closing is expected in early December.

Applied Systems is a University Park, Ill.-based cloud software provider to the property & casualty and benefits insurance industry.

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