PG&E, Diversey, Ultimate Software free up; Pathway Vet, Caesars Resort move up timing

By Sara Rosenberg

New York, June 18 – PG&E Corp. upsized its term loan B, set pricing at the tight side of guidance and modified the original issue discount, and then the debt made its way into the secondary market on Thursday.

Also, Diversey (Diamond BC BV) increased the size of its incremental first-lien term loan, lowered the spread, tightened the original issue discount and shortened the call protection before breaking for trading, and Ultimate Software Group Inc.’s term loans freed up as well.

In more happenings, Pathway Vet Alliance LLC and Caesars Resort Collection LLC accelerated the commitment deadlines for their first-lien term loans.

PG&E updated, breaks

PG&E lifted its five-year senior secured term loan B to $2.75 billion from $1 billion, firmed pricing at Libor plus 450 basis points, the low end of the Libor plus 450 bps to 475 bps talk, and changed the original issue discount to 98.5 from 98, according to a market source.

The term loan still has a 1% Libor floor and 101 soft call protection for one year.

With the term loan upsizing, the company downsized its senior secured high-yield notes offering to $2 billion from $3.75 billion.

On Thursday, the term loan began trading and levels were quoted at 99½ bid, par offered, a trader added.

J.P. Morgan Securities LLC, BofA Securities, Inc., Barclays, Citigroup Global Markets Inc. and Goldman Sachs Bank USA are leading the deal that will be used to help fund the company’s exit from Chapter 11.

PG&E is a San Francisco-based electric and natural gas utility. The company filed bankruptcy on Jan. 29, 2019 in the U.S. Bankruptcy Court for the Northern District of California under Chapter 11 case number 19-30088.

Diversey reworked, trades

Diversey changed the commitment deadline for its non-fungible incremental covenant-lite first-lien term loan (B1/CCC+) due September 2024 to noon ET on Thursday from 5 p.m. ET on Thursday, and shortly after the deadline passed the company upsized the loan to $150 million from $135 million, cut pricing to Libor plus 500 bps from Libor plus 550 bps, adjusted the original issue discount to 97.5 from 96 and shortened the 101 soft call protection to six months from one year, a market source remarked.

As before, the term loan has a 1% Libor floor.

Recommitments for the revised transaction were due at 3:45 p.m. ET on Thursday and the loan broke for trading late in the day at 97½ bid, 98½ offered, another source added.

Credit Suisse Securities (USA) LLC, Jefferies LLC, Barclays, SunTrust Robinson Humphrey Inc. and others to be named are leading the deal that will be used to repay revolver borrowings.

Diversey is a Fort Mill, S.C.-based hygiene and cleaning solutions company.

Ultimate hits secondary

Ultimate Software’s non-fungible incremental bank debt freed to trade, with the $2.945 billion covenant-lite first-lien term loan B due May 2026 quoted at 99 bid, 99¾ offered, and the $600 million covenant-lite second-lien term loan due May 2027 quoted at par ½ bid, 101 offered, according to a market source.

Pricing on the first-lien term loan is Libor plus 400 bps with a step-down to Libor plus 375 bps at 5.5x total net leverage and a 0.75% Libor floor. The debt was sold at an original issue discount of 98.5 and has 101 soft call protection for six months.

The second-lien term loan is priced at Libor plus 675 bps with a 0.75% Libor floor and was issued at a discount of 99. This tranche has call protection of 102 in year one and 101 in year two.

During syndication, the first-lien term loan was upsized from $2.6 billion, the spread firmed at the low end of the Libor plus 400 bps to 425 bps talk, the step-down was added and the discount was tightened from 98. Also, the second-lien term loan was downsized from $700 million, pricing was reduced from Libor plus 700 bps and the discount was changed from 98.

Ultimate lead banks

Credit Suisse Securities (USA) LLC, Nomura and others to be announced are the lead arrangers on Ultimate Software’s term loans, with Credit Suisse the left lead on the term loan B and Nomura the left lead on the second-lien loan.

Closing is expected on July 1.

Proceeds will be used to refinance debt at Kronos Inc. and the increased term loan borrowings will be used to repay revolver borrowings at Ultimate Software.

Ultimate Software and Kronos merged earlier this year in an all-stock transaction. Hellman & Friedman LLC, the controlling shareholder of both Kronos and Ultimate Software, is the controlling shareholder of the combined company, and Blackstone, GIC, Canada Pension Plan Investment Board and JMI Equity are minority investors.

Weston, Fla.-based Ultimate Software and Lowell, Mass.-based Kronos are providers of cloud human capital management and employee experience solutions. The combined company shares joint headquarters in Weston, Fla., and Lowell, Mass.

Pathway revises timing

In other news, Pathway Vet Alliance accelerated the commitment deadline for its $945 million senior secured first-lien term loan due March 2027 to 2 p.m. ET on Monday from 2 p.m. ET on Tuesday, according to a market source.

Talk on the first-lien term loan is Libor plus 400 bps to 425 bps with a 0% Libor floor, an original issue discount of 97 and 101 soft call protection for six months.

The first-lien term loan is split between a $77 million delayed-draw piece under which the commitment terminates in March 2022 and there is a ticking fee of half the drawn spread until June 30 and the full spread thereafter, and an $868 million funded piece.

The company’s $1.28 billion of credit facilities also provide for an $80 million revolver due March 2025 and a $255 million privately placed senior secured second-lien term loan due March 2028.

Jefferies LLC, BofA Securities, Inc., Ares, Golub and Nomura are leading the deal that funds the recently completed acquisition of the company by TSG Consumer Partners from Morgan Stanley Capital Partners.

Pathway is an Austin, Tex.-based veterinary management group.

Caesars moves deadline

Caesars Resort Collection revised the commitment deadline for its $1.47 billion five-year covenant-lite first-lien term loan (B1/B+) to 5 p.m. ET on Thursday from noon ET on Friday, a market source said.

The term loan is talked at Libor plus 450 bps with a 0% Libor floor, an original issue discount of 96 and 101 soft call protection for six months.

Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC, Macquarie Capital (USA) Inc., BofA Securities, Inc., Deutsche Bank Securities Inc., Goldman Sachs Bank USA, SunTrust Robinson Humphrey Inc., U.S. Bank and Citizens Bank are the lead arrangers on the deal.

Proceeds will be used to help fund the acquisition of Caesars Entertainment Corp. by Eldorado Resorts Inc. for $8.40 per share in cash consideration and 0.0899 of a share of Eldorado common stock for each Caesars share.

Closing is expected in mid-2020.

Caesars is a Las Vegas-based gaming and entertainment company. Eldorado is a Reno, Nev.-based gaming company. At closing, the combined company will retain the Caesars name and be based in Reno.

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