Lumentum, Dynatrace break; Herbalife, AppLovin, Compuware, BJ’s Wholesale tweak deals

By Sara Rosenberg

New York, Aug. 8 – Lumentum Holdings Inc.’s term loan made its way into the secondary market on Wednesday and was seen trading above its original issue discount, and Dynatrace’s bank debt broke for trading as well.

Moving to the primary market, Herbalife Nutrition Ltd. upsized its revolver, term loan A and term loan B, and tightened the spread and original issue discount on the B loan, and AppLovin Corp. lifted pricing on its term loan B and added a step-down.

Also, Compuware Corp. lowered the spread and modified the original issue discount on its first-lien term loan, BJ’s Wholesale Club Inc. reduced the size of its first-lien term loan, and Cole-Parmer Instrument Co. (CPI Holdco LLC) and Advanced Computer Software (Air Newco LP) released talk with launch.

Lumentum frees up

Lumentum’s $500 million seven-year covenant-light first-lien term loan (Ba2/BB) began trading, with levels quoted at par bid, par ¾ offered, according to a trader.

Pricing on the term loan is Libor plus 250 bps with a step-down to Libor plus 225 bps at 0.5 times net first-lien leverage with a $100 million cap on cash netting, and a 0% Libor floor. The term loan was sold at an original issue discount of 99.75, and has 101 soft call protection for six months and a ticking fee of half the margin from days 31 to 60 and the full margin thereafter.

On Tuesday, pricing on the term loan firmed at the low end of the Libor plus 250 bps to 275 bps talk, the step-down was added and the discount was tightened from 99.5.

Deutsche Bank Securities Inc. is leading the deal that will help fund the acquisition of Oclaro Inc. for $5.60 in cash and 0.0636 of a share of Lumentum common stock, or about $1.8 billion.

Closing is expected in the second half of this year, subject to approval by Oclaro’s stockholders, antitrust regulatory approval in the U.S. and China, and other customary conditions.

Lumentum is a Milpitas, Calif.-based provider of photonics products for optical networking and lasers. Oclaro is a San Jose, Calif.-based provider of optical components and modules for the long-haul, metro and data center markets.

Dynatrace hits secondary

Dynatrace’s credit facilities freed to trade too, with the $950 million seven-year first-lien term loan (B1/B) seen at par ¼ bid, par ¾ offered and the $170 million eight-year second-lien term loan (Caa1/CCC+) seen at par ½ bid, a market source said.

Pricing on the first-lien term loan is Libor plus 325 bps with a 25 bps step-down based on leverage, a 25 bps step-down upon an initial public offering and a 0% Libor floor. The debt was issued at par and has 101 soft call protection for six months.

The second-lien term loan is priced at Libor plus 700 bps with a 0% Libor floor and was sold at an original issue discount of 99.75. This tranche has hard call protection of 102 in year one and 101 in year two, with the exception that IPO proceeds and change of control will be at 101 in year one.

Dynatrace getting revolver

Along with the first-and second-lien term loans, Dynatrace’s $1.18 billion of senior secured credit facilities include a $60 million five-year revolver (B1/B).

On Tuesday, the spread on the first-lien term loan was lowered from Libor plus 350 bps and the issue price was revised from 99.5. Additionally, pricing on the second-lien term loan was reduced from Libor plus 750 bps and the discount was changed from 99.

Jefferies LLC, Goldman Sachs Bank USA and J.P. Morgan Securities LLC are the leading the deal that will be used to refinance debt under the company’s former parent Compuware Corp.

Dynatrace is a Waltham, Mass.-based digital performance management company.

Herbalife reworks deal

Switching to the primary market, Herbalife Nutrition lifted its seven-year term loan B to $750 million from $600 million, cut pricing to Libor plus 325 bps from talk in the Libor plus 375 bps to 400 bps range and moved the original issue discount to 99.75 from 99.5, while keeping the 0% Libor floor and 101 soft call protection for six months intact, a market source remarked.

Additionally, the company upsized its revolver to $250 million from $200 million and its term loan A to $250 million from $200 million.

Final commitments are due at 10 a.m. ET on Thursday, the source added.

Jefferies LLC and Rabobank are leading the now $1.25 billion of senior secured credit facilities that will be used with $400 million of senior notes to refinance an existing credit facility and, due to the upsizings, to add cash to the balance sheet.

Herbalife is a Los Angeles-based nutrition and weight management company.

AppLovin revises loan

AppLovin raised pricing on its $820 million seven-year covenant-light term loan B (B1/B+) to Libor plus 375 bps from talk in the Libor plus 325 bps to 350 bps area and added a step-down to Libor plus 350 bps when total leverage is 3.5 times, according to a market source.

As before, the term loan has a 0% Libor floor and an original issue discount of 99.5.

Bank of America Merrill Lynch and KKR Capital Markets are leading the deal that will be used with a minority investment from KKR to repurchase 100% of the company’s outstanding convertible promissory notes and to pay fees and expenses.

On July 17, KKR announced that it was making a $400 million investment in the company.

AppLovin is a Palo Alto, Calif.-based mobile monetization platform that enables performance-based user acquisition campaigns for mobile game and other app developers.

Compuware flexes

Compuware reduced the spread on its $475 million seven-year first-lien term loan to Libor plus 350 bps from talk in the range of Libor plus 400 bps to 425 bps and tightened the original issue discount to 99.75 from 99.5, a market source remarked.

The term loan still has a 0% Libor floor and 101 soft call protection for six months.

The company’s $535 million of credit facilities (B1/B) also include a $60 million five-year revolver.

Recommitments are due at 11 a.m. ET on Thursday, the source added.

Jefferies LLC, J.P. Morgan Securities LLC and Goldman Sachs Bank USA are leading the deal that will be used to repay the company’s existing HoldCo debt in connection with the spinoff of Dynatrace from the existing business.

Compuware is a Detroit-based technology performance company.

BJ’s downsizes

BJ’s Wholesale Club trimmed its first-lien term loan due Feb. 3, 2024 to $1,537,700,000 from $1,637,700,000, and left pricing at Libor plus 300 bps with a step-down to Libor plus 275 bps at 3 times first-lien net leverage, a 0% Libor floor and a par issue price, a market source said.

The term loan still has 101 soft call protection for six months.

Allocations are expected on Thursday, the source added.

Nomura, Bank of America Merrill Lynch and Deutsche Bank Securities Inc. are leading the deal that will be used to reprice from Libor plus 350 bps with a 1% Libor floor an existing first-lien term loan, which is being reduced from a size of $1,887,700,000 (post an Aug. 3 amortization payment) with excess proceeds from a recently priced initial public offering and borrowings under an ABL revolver. The amount of ABL borrowings being used for the transaction was increased by $100 million with the downsizing.

Existing lenders that have chosen to roll into the new deal will have their holdings reduced by about 6%.

Closing is expected during the week of Aug. 13.

BJ’s is a Westborough, Mass.-based operator of warehouse clubs.

Cole-Parmer floats OID

Also in the primary market, Cole-Parmer Instrument held its lender call on Wednesday and announced original issue discount talk of 99.5 on its $85 million incremental first-lien term loan (B) due March 21, 2024, according to a market source.

The incremental first-lien term loan is priced at Libor plus 350 bps with a 1% Libor floor, in line with existing term loan pricing, and has 101 soft call protection for six months.

Jefferies LLC is leading the deal that will be used to fund a distribution to shareholders.

The company is also seeking an amendment to its credit agreement for which lenders are offered a 10 bps consent fee, the source said.

Commitments and consents are due on Tuesday.

Cole-Parmer is a Vernon Hills, Ill.-based provider of laboratory and industrial fluid handling products, instrumentation, equipment and supplies.

Advanced Computer launches

Advanced Computer Software launched in the morning a £35 million equivalent add-on term loan B split between U.S. and sterling tranches, a market source remarked.

Original issue discount talk on the U.S. add-on term loan B is 99.75 to par and discount talk on the sterling add-on term loan B is 99.5, the source added. Pricing on the tranches is Libor plus 475 bps with a 0% Libor floor.

Commitments are due at the close of business on Thursday and allocations are targeted for Friday.

Morgan Stanley Senior Funding Inc. is leading the deal that will be used to term out the revolving credit facility and pay transaction fees.

Advanced Computer is a U.K.-based provider of software and IT services.

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