Staples allocates, trades higher; NorthStar prices; secondary quiet amid continued outflows

By Paul A. Harris

Portland, Ore., Jan. 29 – A quiet Friday session closed out a quiet week in bank loan trading, according to a trader based on the East Coast of the United States.

Players are on the sidelines, said the trader.

One reason is continued outflows from the retail accounts.

Dedicated bank loan funds sustained $784 million of outflows for the week to last Wednesday’s close, the trader said, relating a weekly report from Lipper-AMG.

Redemptions have been mitigated, somewhat, by paydowns, said the trader, noting that accounts have seen recent paydowns from Crown Castle, Dollar Tree and The Weather Channel.

However outflows and the expectation of a deal calendar are presently tending to keep people on the sidelines, the trader said.

In the primary market, Staples Inc. downsized $2.5 billion term loan allocated and traded higher.

And NorthStar Asset Management Group Inc. priced its $500 million term loan.

Staples allocates

The Staples downsized $2.5 billion term loan B allocated on Friday.

The deal priced at 99 and traded to 99¼ bid, 99 5/8 offered, the trader said.

Staples downsized the deal from $2.75 billion, electing to draw the $250 million difference from its ABL facility, a move that will render a cheaper cost of capital, a market source said.

Pricing was increased to Libor plus 400 basis points from 350 bps.

Discount talk was unchanged at 99.

The Libor 0.75% Libor floor also remained unchanged.

As reported, Staples revised its plans to fund its term loan B into escrow so that lenders would be offered an increase in pricing. Initial pricing was Libor plus 275 bps with a 0.75% Libor floor and a discount of 99.5.

The escrow proposal is a result of the company extending the termination date for its pending merger with Office Depot Inc. to May 16 from Feb. 4 to allow for the completion of ongoing federal district court litigation with the Federal Trade Commission.

The company intends to fund the loan into escrow on Feb. 2 and the funds can stay in escrow until Sept. 10, with a two-month extension option if the merger has not closed by then, subject to payment of a 25-bps extension fee.

If the merger is terminated, lenders will be paid out at par.

Currently, lenders are being paid the full margin plus the floor on the term loan B because of a ticking fee that was part of the deal at the time of syndication.

Barclays is the administrative agent on the debt.

NorthStar prices

NorthStar Asset Management (NSAM LP) priced its $500 million seven-year senior secured term loan B (Ba2/BBB-) with a 387.5-bps spread to Libor atop a 0.75% Libor floor at 96.50.

The deal was generically 96½ bid, 97½ offered, according to a market source.

The spread came 12.5 bps wide of the Libor plus 375 bps price talk. The reoffer price came cheap to original price talk of 98.5 to 99.

As reported, the deal now includes a financial maintenance covenant set at three-times gross total leverage.

The 101 soft call protection was extended to 12 months from six months.

Other changes include a scaling back of the free and clear incremental facility to $190 million and the elimination of the 100% of the last 12 months consolidated EBITDA grower component.

The excess cash flow sweeps will be decreased.

And the share purchase restricted payments carve-out amount for 2016 through 2017 has been reduced to $100 million.

The most favored nation sunset provision was removed.

Morgan Stanley Senior Funding Inc. is the lead bank on the deal.

Proceeds will be used to fund the acquisition of a roughly 85% interest in the Townsend Group, a manager and adviser of real assets, for about $380 million and to refinance a short-term bridge facility.

Caliber Collision meeting

Caliber Collision scheduled a meeting with lenders at 10 a.m. ET on Thursday to launch an upsizing of its existing senior term loan to $685 million, according to a market source.

Antares Capital is the lead arranger.

Caliber Collision is the largest collision repair multi-shop operator in the United States, operating automotive collision repair centers coast-to-coast across the country.

The Lewisville, Texas-based company has been owned by OMERS Private Equity since 2013.

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