ITP Aero frees to trade; KITO Crosby firms terms; Kraton shelves deal; Xerox sets talk

By Sara Rosenberg

New York, Oct. 31 – ITP Aero’s (Propulsion (BC) Newco LLC) add-on term loan B broke for trading during Tuesday’s market hours, with levels quoted above its original issue discount.

Meanwhile, in the primary market, KITO Crosby (Crosby US Acquisition Corp.) finalized the issue price on its incremental first-lien term loan at the tight end of guidance, and Kraton Corp. pulled its incremental term loan B, with the decision attributed to market conditions.

Also, Xerox Corp. released price talk on its first-lien term loan in connection with its lender call, and EG Group joined this week’s new issue calendar.

ITP Aero breaks

ITP Aero’s fungible $200 million add-on term loan B due Sept. 14, 2029 allocated and made its way into the secondary market on Tuesday, with levels quoted at 99¼ bid, 99¾ offered, a trader said.

Pricing on the add-on term loan is SOFR plus 375 basis points with a step-up to SOFR plus 400 bps based on first-lien net leverage and a 0.5% floor, in line with the company’s existing term loan. The add-on term loan was sold at an original issue discount of 99, and 101 soft call protection for six months, and a ticking fee of half the margin from days 46 to 90 and the full margin thereafter.

RBC Capital Markets, UBS Investment Bank, Santander and BBVA 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 to provide cash on hand for future acquisition opportunities.

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

Bain Capital is the sponsor.

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

KITO Crosby updated

Moving to the primary market, KITO Crosby set the original issue discount on its fungible $205 million incremental first-lien term loan due June 27, 2026 (B3/B) at 99, the tight end of the 98.5 to 99 talk, according to a market source.

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

The incremental term loan allocated on Tuesday, the source added.

UBS Investment Bank, KKR Capital Markets, SMBC, Mizuho, ING and Morgan Stanley Senior Funding Inc. are leading the deal that will be used to repay the company’s existing second-lien term loans.

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.

Kraton pulls loan

Kraton opted to withdraw from market its non-fungible $300 million incremental covenant-lite term loan B (Ba3/B+) due March 15, 2029 due to market conditions, a market source remarked.

The incremental term loan had been talked at SOFR plus 450 bps with a 0.5% floor, an original issue discount of 97 and 101 soft call protection for six months.

Wells Fargo Securities LLC was acting as the left lead arranger on the deal that was going to be used to pay down an existing ABL facility due 2027 and to partially repay a euro term loan B due 2029.

Kraton is a Houston-based producer of specialty polymers and high-value bio-based products derived from pine wood pulping co-products.

Xerox guidance

Xerox held its lender call on Tuesday afternoon and announced talk on its $500 million six-year first-lien term loan (Ba1/BBB-) at SOFR plus 400 bps with a 0.5% floor and an original issue discount of 98, a market source said.

The term loan has 101 soft call protection for six months.

Commitments are due at 11 a.m. ET on Nov. 14, the source added.

Jefferies LLC, Citigroup Global Markets Inc., Credit Agricole, HSBC Securities (USA) Inc., Mizuho, PNC and The Bank of Nova Scotia are leading the deal that will be used to refinance a $555 million bridge loan, which was used to fund the repurchase of 34,245,314 shares of the company’s common stock from Carl C. Icahn and certain of his affiliates.

Xerox is a Norwalk, Conn.-based supplier of print and digital document products and services.

EG on deck

EG Group set a lender call for 10 a.m. ET on Wednesday to launch a fungible $500 million equivalent U.S. and euro senior secured add-on term loan B due February 2028, according to a market source. Management meetings for the debt will take place on Thursday and Friday.

Like the existing term loans, the U.S. add-on term loan is priced at SOFR plus 550 bps with a 0.5% floor, the euro add-on term loan is priced at Euribor plus 550 bps with a 0% floor, and both tranches have 101 soft call protection for six months from Nov. 10.

Commitments are due at 10 a.m. ET on Nov. 9, the source added.

Barclays, JPMorgan Chase Bank and BofA Securities Inc. are the physical bookrunners on the deal. Goldman Sachs, HSBC Securities, ING, Lloyds, Morgan Stanley Senior Funding Inc., Rabobank, SMBC and UBS Investment Bank are joint bookrunners. Barclays is the administrative agent.

The add-on term loans will be used with other new senior secured debt to partially refinance the company’s remaining 2025 and 2026 debt maturities.

EG Group is a Blackburn, U.K.-based convenience retail and fuel station company.

Loan indices mixed

In other news, S&P Global’s iBoxx loan indices were mixed on Monday, with the Leveraged Loan index (MiLLi) closing up 0.02% and the Liquid Leveraged Loan index (LLLi) closing unchanged.

Average secondary market bids in the United States on Monday were 92.84, up 0.01% from the previous day and up 1.06% year to date.

According to the S&P Global data, some of the top advancers on Monday were EyeCare Partners’ August 2022 incremental term loan at 57.5, up from 54.67, IXS’ March 2020 covenant-lite term loan B at 81, up from 78.88, and AMCP Clean Acquisition’s June 2018 covenant-lite term loan at 89.88, up from 89.13.

Some top decliners on Monday were McAfee/Magenta’s May 2021 second-lien covenant-lite term loan at 39.33, down from 41.75, CommScope’s April 2019 covenant-lite term loan B at 86.75, down from 90.08, and Loparex’s August 2019 covenant-lite term loan at 78.5, down from 80.58.

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