Leighton Services trims spreads on U.S. and Australian term loans

By Sara Rosenberg

New York, May 4 – Leighton Services (LS Deco LLC) reduced pricing on its roughly $350 million seven-year covenant-light term loan B to Libor plus 450 basis points from Libor plus 475 bps and on its roughly A$353.7 million seven-year covenant-light term loan B to BBSY plus 550 bps from BBSY plus 575 bps, according to a market source.

Also, the excess cash flow sweep is now 50% with step-downs to 25% at 1.75 times net first-lien leverage, revised from 2 times, and 0% at 1.5 times net first-lien leverage, the source said.

Furthermore, the EBITDA definition was changed to add a 20% maximum cap on add-backs for calculation of EBITDA and a limitation of an 18-month horizon on those add-backs, versus no limit on restructuring add-backs previously.

The U.S. term loan still has a 1% Libor floor, and the Australian term loan still has no floor; both are still offered at an original issue discount of 99, and both still have 101 soft call protection for six months.

The company’s A$900 million-equivalent senior secured credit facility (Ba2/BB+) also includes a A$100 million five-year revolver.

Final commitments are due at noon ET on Tuesday, the source added.

Barclays, Credit Agricole, ANZ and Goldman Sachs are the bookrunners on the deal.

Proceeds are being used to finance the recently completed formation of Leighton Services, a 50-50 investment partnership with Leighton Holdings and Apollo Global Management LLC for Leighton’s merged operations and maintenance services businesses, and to fund a letter-of-credit cash collateral facility.

Net first-lien and net total leverage is 2 times.

Leighton Services is a provider of industrial and civil services to clients in Australia and New Zealand across telecom, roads, water, power, utilities and environmental sectors.

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