Bank loans higher; Science Applications talks $570 million; loan funds see miniscule outflow

By Paul A. Harris

Portland, Ore., April 9 – Bank loans were ¼ point to ½ point higher on Thursday, according to a trader.

“The weak new-issue calendar is starting to cause pain,” the trader said.

“Everybody is looking for paper right now.

“The CLOs are coming out of the woodwork.

“Levels are bloated, and people are concerned that it will spark a new round of repricings.”

The LCDX22 index of bank loan credit default swaps ended the Thursday session unchanged at 102½ bid, 103½ offered, according to a hedge fund manager.

Meanwhile the cash flows of the dedicated bank loan funds were flat during the latest week, according to a market source.

The funds saw $4 million of outflows in the week to Wednesday's close, the source added, citing information in a weekly report from Lipper AMG.

Science Applications talk

Science Applications International Corp. set price talk on its $570 million senior secured term loan B due 2022 (Ba2/BB) at a bank meeting on Thursday, according to a market source.

The deal is talked at Libor plus 325 basis points with a 0.75% Libor floor and an original issue discount of 99.5.

The facility features six-month soft call protection at 101 and 1% annual amortization.

Commitments are due on April 17, and the deal is expected to close on May 4.

Citigroup Global Markets Inc., Bank of America Merrill Lynch, PNC Capital Markets LLC, SunTrust Robinson Humphrey, Inc., U.S. Bank NA and Wells Fargo Securities LLC are the joint lead arrangers and joint bookrunners, with Citigroup as the left lead. Citibank, NA is the administrative agent.

Proceeds will be used to fund the acquisition of Scitor Holdings, Inc.

The McLean, Va.-based technology integrator provides full life-cycle services and solutions in the technical, engineering and enterprise information technology markets.

Access price talk

Access CIG, LLC is talking its $50 million first-lien term loan add-on due October 2021 (B2/B) at Libor plus 500 bps with a 1% Libor floor and an original issue discount of 99.5, according to a market source.

The add-on requires amortization of 1% per year.

Deutsche Bank Securities Inc. is the bookrunner.

Commitments are due April 15.

The Livermore, Calif.-based company plans to use the proceeds to pay down its revolver and for general corporate purposes including potential tuck-in acquisitions.

The prospective borrower provides records storage, data security, information destruction and electronic document management services.

Sesac sets pricing

Sesac set pricing on $115 million of loans on Thursday, according to a market source.

The Nashville-based performing rights organization is shopping a $90 million six-year second-lien term loan with an 800 bps spread to Libor and a 1% Libor floor at 98.5. The loan has 103 call protection in the first year and 101 in the second year.

A $25 million add-on to its existing first-lien term loan has a 25 bps increase to the Libor spread, taking it to 425 bps. There is a 1% Libor floor. The deal is discounted to 99.26 for new money accounts. The add-on will be fungible with the existing loan paper. Soft call protection is extended by six months.

There is a 25 bps amendment fee to existing lenders.

Commitments are due on April 16.

Jefferies LLC has the books.

Proceeds will be used to support a dividend recapitalization.

Last year the company repaid its previous second-lien term loan with proceeds of a $155 million add-on to its previously $235 million first-lien term loan due February 2019, which is priced at Libor plus 400 bps with a 1% Libor floor.

Sesac represents the interests of individual songwriters and publishers of music to ensure they are compensated for the public performance of their copyrighted material.

Qorvo credit agreement

Qorvo, Inc. entered into a credit agreement on Tuesday that provides for a $300 million revolving credit facility due April 7, 2020, according to an 8-K filing with the Securities and Exchange Commission.

The initial interest rate is Libor plus 150 bps. The margin ranges from 150 bps to 200 bps depending on the company’s leverage ratio.

The revolver includes a $25 million sublimit for letters of credit and a $10 million sublimit for swingline loans.

There is a $150 million accordion feature.

The revolver is available to finance working capital, capital expenditures and other corporate purposes.

The company currently has no outstanding amounts under the credit agreement.

Bank of America, NA is the administrative agent, swingline lender and letter-of-credit issuer. TD Bank, NA is syndication agent. Wells Fargo Bank, NA is documentation agent. Bank of America Merrill Lynch is the bookrunner and the lead arranger.

The company’s obligations under the credit agreement are jointly and severally guaranteed by subsidiary guarantors.

Under the credit agreement, the company must maintain a consolidated leverage ratio not to exceed 2.50 to 1.0 as of the end of any fiscal quarter and a consolidated interest coverage ratio not to be less than 3.00 to 1.0 as of the end of any fiscal quarter.

On March 30, the company said it terminated its four-year senior credit facility in anticipation of entering into the new revolver.

The terminated credit agreement included a $125 million revolving credit facility, which included a $5 million sublimit for letters of credit and a $5 million sublimit for swingline loans.

The company said that no borrowings were ever made under the credit agreement and that it incurred no early termination penalty.

Bank of America was the administrative agent and a lender.

Qorvo provides core technologies and RF solutions for mobile, infrastructure and aerospace/defense applications. It is based in Greensboro, N.C., and Hillsboro, Ore.

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