Zest Dental, Del Monte, Brazos Midstream break; Bowlero, American Greetings changes emerge

By Sara Rosenberg

New York, Feb. 1 – Zest Dental Solutions (Zest Acquisition Corp.) trimmed the spread on its first-lien term loan, and revised the pricing step-down, call protection and some other documentation items before freeing up for trading on Wednesday.

Also, Del Monte upsized its add-on term loan B and then made its way into the secondary market, and Brazos Midstream’s (Brazos Delaware II LLC) term loan B broke as well.

Furthermore, Bowlero Corp. cut the spread on its term loan B and tightened the original issue discount twice during the session, American Greetings Corp. increased the size of its first-lien term loan, widened pricing, pushed out the maturity and added a ticking fee, and H.B. Fuller Co. joined this week’s primary calendar.

Zest flexes

Zest Dental reduced pricing on its $320 million five-year senior secured covenant-lite first-lien term loan (B3/B) to SOFR plus 550 basis points from talk in the range of SOFR plus 575 bps to 600 bps, and the debt now has one 25 bps step-down at net first-lien leverage of 3.5x, as opposed to two 25 bps step downs at 0.5x and 1x inside closing first-lien net leverage, according to a market source.

Additionally, the 101 soft call protection on the term loan was extended to one year from six months, MFN was modified to 50 bps for 12 months from 75 bps for 12 months and carve-outs were removed, the investment basket is unlimited subject to total net leverage of 4.25x, changed from 4.5x, step-downs were removed from the asset sale sweep and the company is now required to hold quarterly lender calls, the source said.

The term loan still has a 0% floor and an original issue discount of 95.

Citigroup Global Markets Inc., SVB, UBS Investment Bank, RBC Capital Markets and Jefferies LLC are leading the deal.

Zest hits secondary

Recommitments for Zest Dental’s term loan were due at 2:30 p.m. ET on Wednesday and the debt broke for trading later in the day, with levels quoted at 95½ bid, 97 offered, another source added.

The new term loan will be used with cash from the balance sheet to refinance the company’s existing $252 million first-lien term loan and $115 million second-lien term loan.

Closing is expected on Feb. 8.

Zest Dental is a Carlsbad, Calif.-based developer, manufacturer and supplier of solutions to treat both natural teeth and implant supported restorations.

Del Monte upsized, breaks

Del Monte lifted its fungible add-on term loan B (B3/B) due May 2029 to $125 million from $100 million, according to a market source.

The add-on term loan is still priced at SOFR+CSA plus 425 bps with a 0.5% floor, in line with the existing term loan B, and still has an original issue discount of 98.56, and the add-on and existing term loan are still getting 101 soft call protection for six months. CSA is 10 bps one-month rate, 15 bps three-month rate and 25 bps six-month rate.

Recommitments were due at 11:15 a.m. ET on Wednesday and the add-on term loan freed to trade shortly thereafter, with levels quoted at 99 bid, 99½ offered, another source added.

Goldman Sachs Bank USA is the left lead on the deal that will be used to partially repay existing ABL borrowings.

Del Monte is a producer, distributor and marketer of plant-based food products.

Brazos starts trading

Brazos Midstream’s $800 million seven-year senior secured term loan B (B1/B+) made its way into the secondary market in the afternoon, with levels quoted at 99 1/8 bid, 99¾ offered before moving up to 99¼ bid, 99 7/8 offered, a market source said.

Pricing on the term loan is SOFR plus 375 bps with a 0.5% floor and it was sold at an original issue discount of 99. The debt has 101 soft call protection for six months and no CSA.

During syndication, pricing on the term loan was lowered from talk in the range of SOFR plus 400 bps to 425 bps and the discount was tightened from talk in the range of 98 to 98.5.

Barclays, Jefferies LLC, Bank of Oklahoma and Cadence Bank are leading the deal that will be used to refinance an existing term loan B due 2025.

Brazos is a Fort Worth-based natural gas gathering and processing and crude gathering company servicing producers in the Southern Delaware Basin.

Bowlero tightens

Bowlero trimmed pricing on its $900 million term loan B (B1/B) due February 2028 to SOFR plus 350 bps from talk in the range of SOFR plus 375 bps to 400 bps, and changed the original issue discount to 99.5, from revised talk announced in the morning of 99 and initial talk of 98, according to a market source.

As before, the term loan has a 0% floor and 101 soft call protection for six months.

Commitments were due at 5 p.m. ET Wednesday, accelerated from 5 p.m. ET on Monday, the source added.

JPMorgan Chase Bank and Wells Fargo Securities LLC are leading the deal that will be used to refinance a roughly $786 million term loan due July 2024 that is priced at Libor plus 350 bps with a 1% floor, repay revolving credit facility borrowings and add cash to the balance sheet.

Bowlero is a Mechanicsville, Va.-based operator of bowling centers.

American Greetings reworked

American Greetings raised its senior secured first-lien term loan (B1) to about $402 million from roughly $282 million, revised pricing to SOFR plus 600 bps from talk in the range of SOFR plus 475 bps to 500 bps, changed the maturity date to April 6, 2028 from April 6, 2026, and added a ticking fee of half the margin after 45 days, a market source remarked.

As before, the term loan has a 1% floor, an original issue discount of 97, no CSA and 101 soft call protection for six months.

Recommitments were due at 1 p.m. ET on Wednesday, the source added.

Barclays is leading the deal that will be used to amend and extend an existing roughly $282 million senior secured first-lien term loan due April 2024 priced at Libor plus 450 bps with a 1% floor, and funds from the upsizing will be used to refinance $120 million of senior unsecured notes due April 2025.

American Greetings is a Cleveland-based celebration solutions provider, offering greeting cards, gift packaging, party goods, gifting products and digital offerings.

H.B. Fuller on deck

H.B. Fuller set a lender call for 11 a.m. ET on Thursday to launch an $800 million seven-year first-lien term loan B (Ba1/BB+/BBB-) that is talked at SOFR plus 250 bps to 275 bps with a 0.5% floor, an original issue discount of 99 and 101 soft call protection for six months, according to a market source.

Commitments are due at 5 p.m. ET on Feb. 8, the source added.

JPMorgan Chase Bank is leading the deal, which will be used with a term loan A to refinance the company’s existing term loan B due 2024.

H.B. Fuller is a St. Paul, Minn.-based industrial adhesives, sealants, coatings and specialty materials company.

Fund flows

In other news, actively managed loan fund flows on Tuesday were negative $77 million and loan ETFs were negative $91 million, market sources said.

Actively managed high-yield fund flows on Tuesday were positive $5 million and high-yield ETFs were negative $270 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 up 0.01% and the Liquid Leveraged Loan indices (LLLi) closing out the day unchanged.

Month to date, the MiLLi is up 2.58% and the LLLi is up 2.63%.

Average secondary market bids in the U.S. on Monday were 92.56, up 0.73% year to date.

According to the IHS Markit data, some of the top advancers on Tuesday were National CineMedia’s June 2018 term loan B at 27, up from 25.25, Learfield Communications’ December 2016 covenant-lite term loan B at 67, up from 63.88, and Telesat Canada’s December 2019 covenant-lite term loan at 45.65, up from 43.75.

Some top decliners on Tuesday were Convergeone’s January 2019 covenant-lite term loan at 59.28, down from 60.06, Naked Juice/Tropicana’s January 2022 covenant-lite term loan at 91.77, down from 92.95, and Napa Management’s February 2022 covenant-lite term loan B at 77.83, down from 78.78.

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