Avolon trades lower; DexKo, WEX, Focus Financial, Weld North Education, Crown on deck

By Sara Rosenberg

New York, Jan. 5 – In the secondary market on Friday, Avolon’s term loan softened with further concerns over parent company, HNA Group Co., being able to meet its debt requirements.

Over in the primary market, DexKo Global Inc., WEX Inc., Focus Financial Partners and Weld North Education joined this month’s calendar, and Crown Holdings Inc. disclosed timing for its bank meetings.

Avolon weakens

Avolon’s term loan was lower in trading on Friday as investors were questioning whether its parent company, HNA, has the ability to cover its debt load, according to traders.

The term loan was quoted by one trader at 98/78 bid, 99 1/8 offered, down about half a point on the day, and by another trader at 98¾ bid, 99 offered, down from 99 3/8 bid, 99¾ offered.

One trader said there was a news report regarding HNA missing payments to a number of Chinese banks over the past few weeks and that put pressure on Avolon’s bank debt.

Avolon is an Ireland-based provider of aircraft leasing and lease management services. Bohai Leasing Co. Ltd. is the immediate parent company to Avolon, and Bohai is a majority controlled subsidiary of the HNA Group.

DexKo readies deal

Moving to the primary market, DexKo scheduled a lender call for 10 a.m. ET on Monday to launch an $80 million incremental first-lien term loan due July 24, 2024, of which $50 million is delayed-draw, a repricing of its existing $569 million first-lien term loan due July 24, 2024, a €110 million incremental first-lien term loan due July 24, 2024, of which €90 million is delayed-draw, and a repricing of its existing €349 million first-lien term loan due July 24, 2024, according to a market source.

Talk on the U.S. term loan debt is Libor plus 350 basis points with a 1% Libor floor and talk on the euro term loan debt is Euribor plus 375 bps to 400 bps with a 0% floor, and all of the loans have 101 soft call protection for six months, the source said.

In addition, the add-on term loans are talked with an original issue discount of 99.75, the repricings are offered at par and the delayed-draw tranches have a ticking fee of half the margin from days 31 to 60 and the full margin thereafter.

DexKo lead banks

Credit Suisse Securities (USA) LLC, Goldman Sachs Bank USA, Barclays and Deutsche Bank Securities Inc. are leading DexKo’s term loans (B1/B).

Commitments are due at 5 p.m. ET on Jan. 16, the source added.

The add-on term loans will be used to fund tuck-in acquisitions, the U.S. repricing will take the existing term loan down from Libor plus 400 bps with a 1% Libor floor and the euro repricing will take the existing loan down from Euribor plus 450 bps with a 0% floor.

DexKo is a Novi, Mich.-based supplier of highly engineered running gear technology, chassis assemblies and related components.

WEX on deck

WEX scheduled a lenders’ meeting for Monday to launch a $100 million add-on term loan B and a repricing of its existing $1,185,000,000 term loan B talked at Libor plus 225 bps with a 0% Libor floor, an original issue discount of 99.875 and 101 soft call protection for six months, sources remarked.

Bank of America Merrill Lynch is leading the deal.

The add-on loan will be used pay down revolver borrowings, and the existing term loan B will be repriced from Libor plus 275 bps with a 0% Libor floor.

Total debt to LTM adjusted EBITDA is 4.1 times.

The company is also looking to amend its existing credit agreement to revise the incremental allowance, change the maximum consolidated leverage ratio, permit the incurrence of unsecured indebtedness up to the financial covenant, reduce the required excess cash flow payment by any increase in equity investment in WEX bank and clarify that revolver draws count as internally generated cash, change the definition of pro forma basis for the purposes of everything except for the pro rata pricing grids, and clarify that permitted factoring transactions are not subject to the mandatory prepayment provisions and constitute permitted liens.

WEX is a South Portland, Maine-based provider of corporate payment solutions.

Focus plans call

Focus Financial surfaced with plans to hold a loan lender call on Monday morning, according to a market source.

RBC Capital Markets and SunTrust Robinson Humphrey Inc. are leading deal.

No additional details are available on the transaction at this time, the source added.

Focus Financial is a New York-based partnership of independent, fiduciary wealth-management firms.

Weld coming this month

Weld North Education will hold a bank meeting in New York during the week of Jan. 22 to launch a $300 million term loan B, a market source said.

RBC Capital Markets and Macquarie Capital (USA) Inc. are leading the deal that will be used to help fund the acquisition by Silver Lake Partners of a majority stake in the company from KKR.

Weld North Education is a digital education technology company focused on developing digital curriculum and tools for preK-12th grade.

Crown timing emerges

Crown Holdings set a bank meeting in London for Tuesday and a bank meeting at 10:30 a.m. ET in New York on Wednesday to launch its U.S. and euro senior secured credit facilities, according to a market source.

The company has received a commitment for an up to $4 billion seven-year term loan B, but it is expected that the financing will actually be split between U.S. and euro loans and bonds.

Citigroup Global Markets Inc. is leading the deal that will be used to help fund the acquisition of Signode Industrial Group Holdings (Bermuda) Ltd. from the Carlyle Group in a cash transaction valued at $3.91 billion, subject to customary closing adjustments.

Pro forma net leverage will be 5.1 times as of Sept. 30, 2017 and total net leverage will be 5.3 times as of Sept. 30, 2017.

Closing is expected this quarter, subject to review by various competition authorities.

Crown Holdings is a Philadelphia-based provider of consumer packaging. Signode is a Glenview, Ill.-based provider of transit packaging systems and solutions.

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