Unifrax slides with ratings cut; EG Group sets pricing; Chart Industries shops add-on loan

By Sara Rosenberg

New York, June 27 – In the secondary market on Tuesday, Unifrax (ASP Unifrax Holdings Inc.) saw its first-lien term loan weaken following a ratings downgrade by S&P Global Ratings.

Moving to the primary market, EG Group finalized spreads and original issue discounts on its amended and extended U.S., euro, sterling and Australian dollar first-lien term loans, but has not yet confirmed tranche sizes.

Also, Chart Industries Inc. approached investors with a fungible add-on term loan B and released original issue discount guidance on the debt.

Unifrax softens

Unifrax’s first-lien term loan dropped to 89 bid, 90½ offered on Tuesday from 91 bid, 92 offered on Monday in reaction to S&P lowering the company’s issuer credit and first-lien debt ratings to CCC+ from B-, a trader said. The outlook is negative.

S&P said it downgraded the ratings because of the belief that the company’s weak credit metrics indicate its capital structure is unsustainable.

“While we expect S&P Global Ratings-adjusted leverage will fall moderately in 2023 and 2024, we nevertheless forecast it will be about 10x in 2024, a level we anticipate could challenge the refinancing of its revolving credit facility due in September 2025 and term loan due in December 2025,” the rating release said.

“Additionally, although the rate on about half of the company’s debt is fixed, elevated cash interest will pressure free operating cash flow through 2024, which we believe increases the likelihood of a transaction that we view as a selective default,” the release added.

Unifrax is a Tonawanda, N.Y.-based supplier of high-performance specialty fibers and inorganic materials used in emission control, thermal management, filtration, battery and fire protection applications.

EG Group updated

Switching to the primary market, EG Group set pricing on its U.S., euro and Australian dollar first-lien term loan B’s due Feb. 7, 2028 at SOFR/Euribor/BBSY plus 550 basis points, the high end of the 525 bps to 550 bps talk, and firmed the original issue discount at 96, the wide end of the 96 to 97 talk, according to a market source.

Also, pricing on the company’s sterling first-lien term loan B due Feb. 7, 2028 firmed at Sonia plus 650 bps, the high end of the Sonia plus 625 bps to 650 bps talk.

In addition, the margin ratchet was removed from the deal, it was revealed that all of the term loans have 101 soft call protection for six months, and investors were told that tranche sizes on the term loans will be confirmed following lender sign-off on documentation, the source said.

At launch, the U.S. term loan B was described as $2.791 billion, the euro term loan B was described as €2.117 billion, the sterling term loan B was described as £600 million and the Australian dollar term loan B was described as A$378 million.

As before, the U.S. term loan has a 0.5% floor, the euro, Australian dollar and sterling term loans have a 0% floor, and the sterling term loan has an original issue discount of 96.

EG Group leads

Barclays is the sole physical bookrunner, a joint global coordinator and the administrative agent on EG Group’s term loans. Other joint global coordinators are JPMorgan Chase Bank, Deutsche Bank Securities Inc. and Rabobank. BofA Securities Inc., Barclays, Deutsche Bank, Goldman Sachs, HSBC Securities, ING, JPMorgan, Lloyds, Morgan Stanley Senior Funding Inc., Rabobank, SMBC and UBS Investment Bank are joint bookrunners.

Recommitments were due at 5 p.m. ET on Tuesday and allocations are expected on Wednesday, the source added.

The debt will be used to amend and extend existing U.S., euro, sterling and Australian dollar first-lien term loans due February 2025, and an existing U.S. first-lien term loan due March 2026.

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

Chart holds call

Chart Industries held a lender call at 11 a.m. ET on Tuesday, launching a fungible $250 million add-on term loan B (B+) due March 2030 talked with an original issue discount of 98.75 to 99.25, a market source remarked.

Like the existing term loan B, the add-on term loan is priced at SOFR+10 bps CSA plus 375 bps with a 0.5% floor, and has 101 soft call protection until September.

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

JPMorgan Chase Bank is leading the deal that will be used for general corporate purposes, including to repay existing debt.

Chart Industries is a Ball Ground, Ga.-based manufacturer of highly engineered equipment servicing multiple applications in the energy and industrial gas markets.

Fund flows

In other news, actively managed loan fund flows on Monday were negative $39 million and loan ETFs were negative $76 million, market sources said.

Outflows for loan funds week-to-date total an estimated $89 million, following outflows in the prior week totaling $152 million, sources added.

Loan indices rise

IHS Markit’s iBoxx loan indices were stronger on Monday, with the Leveraged Loan indexes (MiLLi) closing out the day up 0.08% and the Liquid Leveraged Loan indices (LLLi) closing out the day up 0.01%.

Month to date, the MiLLi is up 1.73% and year to date it is up 5.7%, and the LLLi is up 1.7% month to date and up 5.61% year to date.

Average secondary market bids in the U.S. on Monday were 91.38, unchanged from the previous day and down 0.54% year to date.

According to the IHS Markit data, some of the top advancers on Monday were Brand Energy’s June 2017 Co-Op covenant-lite term loan at 98.88, up from 95.34, Brook & Whittle’s December 2021 covenant-lite term loan at 88, up from 85.25, and U.S. Renal Care’s June 2019 term loan B at 47.58, up from 46.71.

Some top decliners on Monday were Sound Physicians’ June 2018 term loan at 56.95, down from 61.53, Dell Software’s (Quest/One Identity) February 2022 covenant-lite term loan at 76.17, down from 81.27, and At Home Group’s July 2021 covenant-lite term loan B at 62.54, down from 64.53.

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