Internet Brands allocates, trades higher; amid retail outflows, CLO bid stays robust, trader says

By Paul A. Harris

Portland, Ore., June 27 – The LCDX 22 index of bank loan credit default swaps remained unchanged on Friday at 104 7/8 bid, 105 3/8 offered, according to a hedge fund manager.

The bid for second-lien loan paper remains strong, according to a trader, who added that it could be the loan market's present outperformer.

“None of it is being offered,” the trader specified.

“You can't find it.”

In the primary market, Internet Brands Inc. set final pricing on $680 million of term loans.

Both tranches priced at 99 and traded higher, according to a trader.

The first-lien tranche broke to 99¾ bid, and traded to 99¾ bid, par ¼ offered, the source said.

The second-lien tranche broke to 99 3/8 bid, 99 7/8 offered and remained there, the trader added.

Outflows' impact negligible

News that bank loan mutual funds sustained another sizable outflow does not seem to be impacting loan executions or the performance of loans in the secondary market, a trader said Friday.

The loan funds saw $424 million of outflows during the week to Wednesday, the trader said, citing a report from Lipper-AMG.

The four-week moving average of flows is a hefty negative $700 million, the source added.

However, the outflows are from the retail portion of the market, which amounts to about one-third of the market, the trader said.

“These outflows are offset by CLOs,” the source remarked.

“CLO issuance for June, alone, has been $12 billion. And we're hearing that separate accounts are seeing inflows.”

Internet Brands prices

Internet Brands said that its upsized $510 million seven-year first-lien covenant-light term loan (B1/B) priced with a 400 basis points spread to Libor, on top of spread talk that had been revised tighter from 425 bps. It comes with 101 soft call protection that was extended to one year from six months.

The company’s downsized $170 million eight-year second-lien covenant-light term loan (Caa1/CCC+) priced with a 750 bps spread to Libor with a 1% Libor floor.

The second-lien loan comes with call protection of 102 in year one and 101 in year two.

The deal saw $25 million of proceeds shifted to the first-lien tranche – upsizing it to $510 million from $485 million – from the second-lien tranche, which was downsized to $170 million from $195 million.

The company’s $755 million credit facility also includes a $75 million five-year revolver.

Credit Suisse Securities (USA) LLC, RBC Capital Markets and KKR Capital Markets are the joint bookrunners on the deal and joint lead arrangers, with Deutsche Bank Securities Inc., Mizuho and SMBC. Credit Suisse is the left lead on the first-lien loan, and RBC is the left lead on the second-lien loan.

The borrowers are MH Sub I LLC and Micro Holding Corp.

Proceeds will be used to help fund the buyout of the company by KKR from Hellman & Friedman and JMI Equity.

Internet Brands is an El Segundo, Calif.-based provider of vertically focused online media and software services.

ServiceMaster tightens

ServiceMaster Co. LLC tightened the spread and price talk for its $1,825,000,000 covenant-light seven-year term loan B, a market source said on Friday.

The spread talk tightened to Libor plus 325 basis points from earlier talk of 325 to 350 bps. Price talk saw the discount firm at 99, increasing the discount from earlier talk of 99 to 99.5. The 1% Libor floor remains unchanged.

The 101 soft call protection increased to 12 months from six months.

The length of the 50 bps most-favored-nation provision increased and will now be in place for the life of the deal; previously the provision was to be in place for 18 months.

Commitments were due on Friday, and the deal was expected to allocate, according to a trader, who added that it did not appear to have done so by late Friday afternoon.

The $2,125,000,000 credit facility also features a $300 million five-year revolver.

J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC, Goldman Sachs Bank USA, Morgan Stanley Senior Funding Inc., Bank of America Merrill Lynch, Jefferies Finance LLC, Natixis and RBC Capital Markets are the lead banks on the deal.

Proceeds will be used to refinance an existing revolver, a $988 million term loan B and a $1,205,000,000 term loan C maturing in January 2017.

Other funds for the refinancing will come from available cash and a portion of the expected proceeds of the company’s initial public offering of common stock.

The company plans on using the remainder of the expected IPO proceeds to redeem a portion of its senior notes.

ServiceMaster is a Memphis-based provider of maintenance services to residential and commercial customers.

Rovi tweaks tranches, pricing

Rovi Solutions Corp. shifted $25 million of proceeds between the pro rata tranches of its $1 billion senior secured credit facility (Ba3/BB-), a market source said on Friday.

The five-year revolver is downsized to $175 million from $200 million, and the five-year term loan A is upsized to $125 million from $100 million.

Both tranches are talked at Libor plus 225 basis points with an offer price of 99 5/8, and no Libor floor.

The $700 million seven-year covenant-light term loan B remains unchanged in size. The deal is talked at Libor plus 300 bps with a 0.75% to 1% Libor floor and an original issue discount of 99½. The term loan spread talk was tightened from earlier talk of 300 to 325 bps.

Included in the term loan B is 101 soft call protection for six months.

Amortization on the term loan A is 5% per annum and on the term loan B is 1% per annum.

The revolver and term loan A have a maximum total leverage covenant of 6 times and a minimum interest coverage covenant of 3.5 times.

The deal is set to allocate on Monday.

Two names, SunTrust Robinson Humphrey and Fifth Third Bank, were added to the syndicate, the source said on Friday. They joint Morgan Stanley Senior Funding Inc. and Bank of America Merrill Lynch as joint lead arrangers and bookrunners on the deal.

Proceeds will be used to refinance existing debt and for general corporate purposes.

Rovi is a Santa Clara, Calif.-based technology company.

Birch prices wide

Birch Communications Inc. priced its $450 million six-year term loan (B3/B) wide of spread talk and cheap to discount talk, a market source said on Friday.

The deal came at a 675 basis points spread to Libor, 100 bps beyond the wide end of the Libor plus 550 to 575 bps spread talk. The deal priced at 98, a dollar cheaper than discount talk of 99.

The deal's 1% Libor floor remains unchanged, as does the one-year 101 soft call protection.

An amortization structure was added. The loan now amortizes at 2.5% in both of years one and two. The amortization rate steps up to 5% year three.

The deal is expected to allocate during the week ahead.

The company’s $500 million senior secured credit facility also includes a $50 million five-year revolver.

Jefferies Finance LLC and PNC Capital Markets LLC are the leads on the deal.

Proceeds will be used to help fund the acquisition of Cbeyond Inc. for about $10 per share in cash for a total purchase price of around $323 million.

Leverage is around 2.5 times.

Birch is an Atlanta-based IP-based telecommunications and managed services provider. Atlanta-based Cbeyond provides telecommunications and information technology services to small- and mid-sized businesses.

Open Mobile syndication wraps

Jefferies LLC and SunTrust Robinson Humphrey have completed the syndication of the Open Mobile $190 million senior secured refinancing, according to a market source.

The deal included a $180 million Libor plus 900 basis points six-year term loan which priced at 98.00, with a 1% Libor floor. It is callable in one year at 104, with the call premium declining in annual steps to 103, 103, 101 and par.

The facility also included a $10 million five-year revolver.

The lenders will receive warrants.

The borrower is a Guaynabo, Puerto Rico-based mobile network operator.

Energy Exploration call

Energy & Exploration Partners, Inc. plans to participate in a lender call on Monday at 2 p.m. for its $775 million term loan B, according to a market source.

Citigroup, Credit Suisse and Global Hunter will lead the call.

Energy & Exploration is a Fort Worth, Texas-based exploration and production company.

Iglo sets structure

Iglo Group set out the structure of a €1,121,000,000 equivalent six-year term loan facility B, a market source said on Friday.

The deal features a €621 million tranche talked at Euribor plus 450 basis points, and a €500 million equivalent sterling denominated tranche talked at Libor plus 500 bps.

Original issue discounts remain to be determined.

Proceeds will be used to refinance Iglo's existing credit facility.

There is also a €80 million revolver due December 2019 talked at Euribor plus 425 bps with a 40% margin commitment fee and a springing maintenance covenant, with proceeds to fund working capital and for general corporate purposes.

Commitments are due Wednesday.

Deutsche Bank is the left bookrunner. Credit Suisse is the administrative agent and a joint bookrunner. Nomura is also a joint bookrunner,

The borrower is a Bedfont, England-based frozen food company.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.