SI Group flat post downgrade; FR Refuel loan changes surface; KITO Crosby releases talk

By Sara Rosenberg

New York, Oct. 23 – SI Group’s (Polar US Borrower LLC) first-lien term loan held steady in the secondary market on Monday following a downgrade by Moody’s Investors Service of the corporate family rating, senior secured first-lien rating and senior unsecured notes rating.

Meanwhile, in the primary market, FR Refuel LLC decreased the size of its non-fungible incremental first-lien term loan and widened the original issue discount.

Also, KITO Crosby (Crosby US Acquisition Corp.) released original issue discount talk on its incremental first-lien term loan in connection with its lender call, and ITP Aero (Propulsion (BC) Newco LLC) and Colibri joined this week’s new issue calendar.

SI Group steady

SI Group’s first-lien term loan was quoted at 78¼ bid, 79¼ offered, unchanged from Friday’s levels, as the company’s ratings were cut by Moody’s, a market source remarked.

Late Friday, Moody’s downgraded the company’s corporate family, first-lien term loan and first-lien revolving credit facility ratings to Caa1 from B3 and senior unsecured notes rating to Caa3 from Caa2. Also, the outlook was revised to negative from stable.

“The downgrade and outlook revision reflect SI Group’s deterioration in credit metrics given lower volumes as a result of customer destocking and unfavorable price/mix effect that has led to a weakening liquidity position,” said Domenick R. Fumai, Moody’s vice president and lead analyst for SI Group, in the rating release.

As of June 30, the company had about $68 million outstanding under its revolver, leaving about $25 million of availability without triggering a springing first-lien net leverage ratio covenant of 7.1x that is triggered above 35% utilization or $95.375 million.

Moody’s believes that if the covenant were to be triggered, SI Group would not currently be in compliance, the rating release added.

SI Group is a The Woodlands, Tex.-based developer and manufacturer of performance additives and intermediates.

FR Refuel reworked

Switching to the primary market, FR Refuel scaled back its non-fungible incremental covenant-lite first-lien term loan due Nov. 8, 2028 to $100 million from $120 million and changed the original issue discount to 96 from 97, according to a market source.

As before, the incremental term loan is talked at SOFR+CSA plus 475 basis points with a 0.75% floor, and has 101 soft call protection for six months. CSA is 11 bps one-month rate, 26 bps three-month rate and 43 bps six-month rate.

Commitments are due at noon ET on Wednesday, the source added.

Citizens Bank is leading the deal that will be used to term out revolver borrowings and to fund an acquisition.

First Reserve is the sponsor.

FR Refuel is a Charleston, S.C.-based regional convenience store operator.

KITO Crosby guidance

KITO Crosby held its lender call on Monday morning and announced original issue discount talk of 98.5 to 99 for its fungible $205 million incremental first-lien term loan due June 27, 2026 (B), a market source said.

Pricing on the term loan is SOFR plus 500 bps with a 0.5% floor.

Commitments are due at 5 p.m. ET on Oct. 31, the source added.

UBS Investment Bank and KKR Capital Markets are leading the deal that will be used to repay second-lien term loan borrowings.

Pro forma for the transaction, the first-lien term loan will total $533.35 million.

KITO Crosby is a manufacturer and marketer of highly engineered equipment and solutions used in lifting, rigging, and custom material handling solutions.

ITP Aero on deck

ITP Aero set a lender call for 10:30 a.m. ET on Tuesday to launch a fungible $200 million add-on term loan B due Sept. 14, 2029, according to a market source.

Pricing on the company’s existing term loan B is SOFR plus 375 bps with a 0.5% floor. The loan has a step-up to SOFR plus 400 bps at more than 0.5x inside closing first-lien net leverage of 3.5x at the time of the company’s buyout by Bain Capital Private Equity from Rolls-Royce.

RBC Capital Markets, UBS Investment Bank and Santander are leading the deal that will be used to fund the acquisition of BP Aerospace, an Irving, Tex.-based provider of aircraft engine aftermarket services, and add cash to the balance sheet for future acquisition opportunities.

Closing on the acquisition is expected by year-end, subject to regulatory approvals.

ITP Aero is a Zamudio, Spain-based aerospace and engine component supplier.

Colibri readies loan

Colibri scheduled a lender call for 2 p.m. ET on Wednesday to launch an incremental first-lien term loan, a market source remarked.

Golub Capital and Jefferies LLC are leading the deal. Jefferies is the existing agent.

The incremental term loan will be used to help support an acquisition.

Colibri, a Gridiron Capital LLC portfolio company, is a St. Louis-based provider of career lifecycle management and mandatory professional education solutions.

Fund flows

In other news, actively managed loan fund flows on Friday were negative $20 million and loan ETFs were positive $79 million, sources said.

Year to date outflows for loan funds total $19 billion, with positive $237 million ETFs, sources added.

Loan indices lower

IHS Markit’s iBoxx loan indices were weaker on Friday, with the Leveraged Loan indexes (MiLLi) closing down 0.06% and the Liquid Leveraged Loan indices (LLLi) closing down 0.11%.

Month to date, the MiLLi is up 0.11% and year to date it is up 9.95%, and the LLLi is up 0.08% month to date and up 9.15% year to date.

Average secondary market bids in the United States on Friday were 92.98, down 0.03% from the previous day and up 1.21% year to date.

According to the IHS Markit data, some of the top advancers on Friday were EyeCare Partners’ August 2022 incremental term loan at 65.17, up from 62.88, Xplornet’s October 2021 second-lien covenant-lite term loan at 36.25, up from 35, and Envision Healthcare/Amsurg’s July 2022 first-out covenant-lite term loan at 126.17, up from 124.

Some top decliners on Friday were At Home Group’s July 2021 covenant-lite term loan B at 36.5, down from 37.88, Xplornet’s October 2021 covenant-lite term loan at 67.75, down from 69, and United Site’s December 2021 covenant-lite term loan B at 76.39, down from 77.75.

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