Allied Universal dips; Axilone U.S. loan not currently being extended, but hoped to be soon

By Sara Rosenberg

New York, June 16 – In the secondary market on Friday, Allied Universal’s term loan continued to soften as investors were still reacting to a ratings downgrade that was announced on by Moody’s Investors Service on Thursday.

Meanwhile, on the primary front, Axilone (CCP Lux Holding Sarl) is not extending its U.S. term loan B to 2028 from 2025 at this time, but the plan is to do it sometime soon, as the company successfully completed the extension of its euro term loan B.

Allied Universal slides

Allied Universal’s term loan fell to 95 5/8 bid, 96 3/8 offered on Friday from 96 1/8 bid, 96 5/8 offered on Thursday in reaction to ratings being cut by Moody’s, according to a trader. On Wednesday, prior to the downgrade news, the term loan was quoted at 96½ bid, 96¾ offered.

Moody’s, on Thursday, trimmed the company’s corporate family and senior secured instruments ratings to B3 from B2, and senior unsecured debt rating to Caa2 from Caa1. The outlook was changed to stable.

The downgrade reflects the company’s persistently high leverage, the expectation of negative levered free cash flow for this year and aggressive financial strategies that includes frequent debt funded acquisitions, the rating release explained.

Moody’s expects that despite solid revenue growth and stable margins, the company will likely continue to execute on debt funded acquisitions that will cause debt-to-EBITDA leverage to remain above 7x over the next 12-18 months. The company’s Moody’s adjusted debt to EBITDA as of March was 8.5x.

Allied Universal is a Conshohocken, Pa. and Santa Ana, Calif.-based provider of security services.

Axilone extension plans

Moving to the primary market, Axilone is not currently extending its $44.6 million term loan B to 2028 from 2025, but the intention is to extend the debt “in short order”, a market source told Prospect News.

The company did allocate and price on Friday its €313.6 million amended and extended covenant-lite term loan B due January 2028, the source said.

As previously reported, the euro term loan B is priced at Euribor plus 475 basis points with a 0% floor and an original issue discount of 98. The debt has 101 soft call protection for six months.

During syndication, the discount on the euro term loan B firmed at the tight end of the 97 to 98 talk.

RBC Capital Markets is the global coordinator on the deal and the administrative agent. Barclays is a joint bookrunner.

The euro term loan B will amend and extend an existing €313.6 million term loan B due 2025.

The U.S. term loan amendment and extension proposal was never launched to the broad market.

Trustar is the sponsor.

Axilone is a Paris-based packaging specialist for the cosmetics, fragrance and skin care segments.

Fund flows

In other news, actively managed loan fund flows on Thursday were negative $48 million and loan ETFs were negative $6 million, market sources said.

Loan funds reported weekly outflows totaling $87 million, including positive $232 million ETFs, sources continued. This follows the prior week’s inflow of $320 million, which was the third inflow in the last 52 weeks and included the first inflow for actively managed funds in 57 weeks.

Dedicated loan fund AUM is $88.9 billion, compared to as much as $142.4 billion in May.

Year to date outflows for loan funds total $18.2 billion, with negative $1.3 billion ETFs, sources added.

Loan indices rise

IHS Markit’s iBoxx loan indices were stronger on Thursday, with the Leveraged Loan indexes (MiLLi) closing out the day up 0.05% and the Liquid Leveraged Loan indices (LLLi) closing out the day up 0.03%.

Month to date, the MiLLi is up 1.38% and year to date it is up 5.34%, and the LLLi is up 1.63% month to date and up 5.54% year to date.

Average secondary market bids in the U.S. on Thursday were 91.42, up 0.08% from the previous day and down 0.5% year to date.

According to the IHS Markit data, some of the top advancers on Thursday were Packers Sanitation Services/PSSI’s March 2021 covenant-lite term loan at 65.75, up from 63.04, Cyxtera’s May 2017 covenant-lite term loan at 47.73, up from 46.03, and West Deptford’s August 2019 term loan at 74.5, up from 72.57.

Some top decliners on Thursday were ScionHealth’s December 2021 covenant-lite term loan B at 40.5, down from 45, Astra/Anthology’s October 2021 covenant-lite term loan B at 69, down from 72.25, and New Trojan/Careismatic’s January 2021 covenant-lite term loan at 59.1, down from 60.8.

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