Horizon Pharma up on possible buyout; Cubic slides with downgrades; Sebia finalizes terms

By Sara Rosenberg

New York, Nov. 30 – Horizon Pharma’s term loans gained some ground in the secondary market on Wednesday on news that its parent company is involved in preliminary discussions that could lead to a buyout offer, and Cubic Corp.’s term loan B and term loan C strip retreated on the back of ratings downgrades by Moody’s Investors Service.

Meanwhile, in the primary market, Sebia set the spread on its U.S. and euro term loans at the high end of guidance, firmed the original issue discount on the U.S. piece at the wide side of talk and finalized the discount on its euro tranche at the tight end of talk.

Also, Axalta Coating Systems Ltd. released price talk on its term loan B in connection with its lender call, and DexKo Global Inc. approached investors with a new first-lien term loan.

Horizon Pharma rises

Horizon Pharma’s term loan were stronger in trading as its parent company, Horizon Therapeutics plc, announced that it is engaged in highly preliminary discussions with Amgen Inc., Janssen Global Services LLC and Sanofi which may or may not lead to an offer being made for the entire share capital of the company, according to a market source.

The company’s 2026 term loan was quoted at 99½ bid, par ¼ offered on Wednesday, up from 98 7/8 bid, 99 5/8 offered on Tuesday, and its 2028 term loan was quoted at 99¼ bid, par offered, up from 98 5/8 bid, 99 3/8 offered, the source said.

In an 8-K filed with the Securities and Exchange Commission, Horizon said that each of the possible offerors is required no later than 5 p.m. ET on Jan. 10 to either announce a firm intention to make an offer for the company or announce that it does not intend to make an offer for the company.

Horizon is a Dublin-based biopharmaceutical company.

Cubic falls

Cubic’s term loan B and term loan C strip softened to 85 bid, 88 offered on Wednesday from 91½ bid, 92½ offered on Tuesday on the back of Moody’s downgrading the company and its debt, a market source remarked.

Moody’s announced on Tuesday that it cut Cubic’s corporate family rating to Caa1 from B3, the first-lien senior secured revolver and term loan B rating to Caa1 from B3, and the senior secured term loan C rating to B1 from Ba3. The ratings outlook is stable.

The ratings downgrades reflect Moody’s expectation of continuing weak free cash flow and sustained weak credit metrics. Moody’s expects supply chain constraints and rising interest rates to continue to pressure cash generation for at least the first half of fiscal 2023 (year ending Sept. 30), the rating release said.

Cubic is a San Diego-based provider of integrated solutions that increase situational understanding for transportation, defense C4ISR and training customers.

Sebia updated

Switching to the primary market, Sebia firmed pricing on its $225 million covenant-lite term loan B due December 2027 and on its €890 million covenant-lite term loan B due December 2027 at SOFR/Euribor plus 475 bps, the high end of the 450 bps to 475 bps talk, a market source said.

In addition, the company set the original issue discount on the U.S loan at 97, the wide end of the 97 to 98 guidance, and the discount on the euro loan at 98, the tight end of the 97 to 98 talk, the source continued.

As before, both term loans have a 0% floor and 101 soft call protection for six months, and the U.S. loan has no CSA.

Commitments continued to be due at 10 a.m. ET on Wednesday and allocations are expected on Thursday, the source added.

Sebia lead banks

Nomura is the sole global coordinator and physical bookrunner on Sebia’s term loans. BNP Paribas Securities Corp., Credit Agricole, Deutsche Bank Securities Inc., HSBC and Natixis are joint bookrunners and mandated lead arrangers.

The debt will be used to extend an existing U.S. term loan due 2024 currently priced at Libor plus 325 bps, an existing euro term loan due 2024 currently priced at Euribor plus 275 bps and an existing euro term loan due 2024 currently priced at Euribor plus 350 bps.

The sponsors are CVC, CDPQ and Tethys Investment.

Sebia is a France-based multi-specialty in-vitro diagnostics company focusing on oncology, genetic hemoglobin and metabolic disorders.

Axalta proposed terms

Axalta Coating Systems held its lender call on Wednesday morning and announced talk on its $2 billion seven-year senior secured term loan B (Ba1) at SOFR plus 325 bps with a 0.5% floor and an original issue discount of 97.5 to 98.5, a market source remarked.

The term loan has 101 soft call protection for six months and no CSA.

Commitments are due at noon ET on Dec. 9, the source added.

Barclays is the left lead on the deal that will be used with cash from the balance sheet to refinance the company’s existing $2.021 billion term loan B due June 2024 and to pay related fees and expenses.

The borrowers are Axalta Coating Systems U.S. Holdings Inc. and Axalta Coating Systems Dutch Holding BBV.

Axalta is a Glen Mills, Pa.-based coatings company focused on providing customers with innovative, colorful and sustainable solutions.

DexKo shops loan

DexKo launched in the morning without a lender call a non-fungible $225 million first-lien term loan due October 2028 talked at SOFR plus 650 bps with a step-up to SOFR plus 750 bps on Oct. 5, 2023, a 0.5% floor and an original issue discount of 90 to 91, according to a market source.

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

Credit Suisse Securities (USA) LLC is the advisor on the deal that will be used to refinance an existing seller note.

DexKo is a Novi, Mich.-based producer of engineered products critical to safety and performance of towable industrial trailer and recreational trailer applications.

Flow Control allocates

Flow Control Group (FCG Acquisitions Inc.) allocated its fungible $90 million incremental first-lien term loan due April 2028, a market source remarked.

Pricing on the incremental term loan is SOFR plus 475 bps with a 0.5% floor and it was sold at an original issue discount of 95.

During syndication, the discount on the term loan firmed at the tight end of the 94 to 95 talk.

KKR Capital Markets is leading the deal that will be used to fund acquisitions under letters of intent.

The incremental term loan is fungible with the company’s existing $200 million incremental first-lien term loan due April 2028.

Flow Control is a Charlotte, N.C.-based distributor and technical adviser for mission critical flow control and industrial automation products and related services.

Fund flows

In other news, actively managed loan fund flows on Tuesday were negative $113 million and loan ETFs were $0, market sources said.

Actively managed high yield fund flows on Tuesday were positive $20 million and high yield ETFs were negative $496 million, sources added.

Loan indices mixed

IHS Markit’s iBoxx loan indices were mixed on Tuesday, with the Leveraged Loan indexes (MiLLi) closing out the day down 0.02% and the Liquid Leveraged Loan indices (LLLi) closing out the day up 0.01%.

Month to date, the MiLLi is up 1.15% and year to date its down 1.64%. The LLLi is up 0.95% month to date and down 2.51% year to date.

Average secondary market bids in the U.S. on Tuesday were 92.30, down 0.02% from the previous day and down 4.70% year to date.

According to the IHS Markit data, some of the top advancers on Tuesday were Mitel Networks’ November 2018 covenant-lite fourth out no roll-up term loan at 31.21, up from 29.58, Sterling Infosystems’ June 2015 covenant-lite term loan at par, up from 98.50, and LANDesk Software’s March 2021 add-on covenant-lite term loan B at 76.25, up from 75.50.

Some top decliners on Tuesday were Tectum Holdings/Truck Hero’s January 2021 covenant-lite term loan B at 84.25, down from 88.27, Electronics for Imaging’s July 2019 covenant-lite term loan at 70.83, down from 73.08, and Team Health’s January 2017 covenant-lite term loan at 83, down from 85.54.

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