Copeland, Allied Universal break; CommScope up with earnings; First Student down again

By Sara Rosenberg

New York, May 4 – Copeland reduced the size of its term loan B and Allied Universal increased the size of its incremental first-lien term loan B, and then both of these deals freed up for trading on Thursday.

Also in the secondary market, CommScope Inc.’s term loan was stronger after the company released first quarter earnings results that showed year-over-year improvements in net income and EBITDA, and First Student’s (First Student Bidco Inc.) strip of term loan B and term loan C debt dipped lower as it continued to react to a recent downgrade by Moody’s Investors Service.

In more happenings, Global Healthcare Exchange LLC set the spread on its term loan at the low end of guidance and tightened the original issue discount, and Focus Financial, Alterra Mountain Co. and Ryman Hospitality Properties Inc. (RHP Hotel Properties LP) released price talk with launch.

Copeland downsized

Copeland scaled back its seven-year term loan B (Ba3/BB-/BB+) to $2.725 billion from $2.75 billion as its U.S. senior secured notes offering was raised to $2.275 billion from $2.25 billion, a market source remarked.

As before, the term loan is priced at SOFR plus 300 basis points with a 0% floor and an original issue discount of 99, and has 101 soft call protection for six months.

Earlier in syndication, pricing on the term loan was lowered from SOFR plus 350 bps.

RBC Capital Markets, Barclays, Wells Fargo Securities LLC, SMBC, Goldman Sachs Bank USA, BNP Paribas Securities Corp., HSBC Securities (USA) Inc., JPMorgan Chase Bank, Mizuho, Truist, BofA Securities Inc., MUFG, Bank of Nova Scotia, TD Securities (USA) LLC, CIBC, Regions, Fifth Third and US Bank are leading the deal.

Copeland hits secondary

Late in the day on Thursday, Copeland’s term loan B broke for trading, with levels quoted at 99 1/8 bid, 99½ offered, a trader added.

The term loan B, U.S. notes, €455 million of senior secured notes and equity will be used to fund the acquisition by Blackstone of a majority stake in Emerson Electric Co.’s Climate Technologies business (Copeland) for an aggregate purchase price of $14 billion.

Under the agreement, Emerson will receive upfront, pre-tax cash proceeds of about $9.5 billion and a note of $2.25 billion at close and retain 45% common equity ownership in the new stand-alone joint venture.

Closing is expected in the first half of this year, subject to regulatory approvals and customary conditions.

Copeland is a manufacturer of mission critical, highly engineered heating, ventilation, air conditioning and refrigeration components.

Allied Universal upsized

Allied Universal raised its non-fungible incremental covenant-lite first-lien term loan B (B2/B) due May 14, 2028 to $450 million from $400 million, and left pricing at SOFR plus 475 bps with a 0.5% floor and an original issue discount of 97, according to a market source.

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

Morgan Stanley Senior Funding Inc., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., HSBC Securities (USA) Inc., MUFG, Wells Fargo Securities LLC, Barclays, Societe Generale, ING, PNC, US Bank, Truist, Goldman Sachs Bank USA, Mizuho, Santander, BMO Capital Markets and KeyBanc Capital Markets are leading the deal. Credit Suisse is the administrative agent.

Allied Universal frees

Recommitments for Allied Universal’s incremental term loan B were due at 1 p.m. ET on Thursday and the debt began trading in the afternoon, with levels quoted at 97 1/8 bid, 97 5/8 offered, a trader added.

The term loan will be used to refinance existing ABL and revolving credit facility borrowings, and to pay fees, expenses and original issue discount associated with the transaction.

The borrowers are Allied Universal Holdco LLC and Atlas LuxCo4 Sarl.

Closing is expected during the week of May 8.

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

CommScope rises

CommScope’s term loan moved up to 94½ bid, 95½ offered on Thursday from 92½ bid, 93 ½ offered on Wednesday in reaction to the company’s earnings announcement, a market source said.

For the first quarter, the company reported net income of $3.4 million, versus a net loss of $139.9 million in the first quarter of 2022, and net loss attributable to common stockholders of $11.7 million, or $0.06 per diluted share, versus a net loss of $154.4 million, or $0.75 per diluted share, in the comparable period last year.

Core adjusted EBITDA for the quarter was $315.3 million, up 37.1% from $230 million in the 2022 first quarter, and non-GAAP adjusted EBITDA was $312 million, up 23.2% from $253.3 million last year.

Net sales for the quarter were $2.002 billion, down from $2.229 billion in the first quarter of 2022.

“We are pleased with our first quarter results as evident by the 37% core adjusted EBITDA growth year-over year. The improved EBITDA performance allowed us to generate cash that we used to deleverage as we retired $57 million of debt in the first quarter. With our LTM core adjusted EBITDA of $1,337 million, a 7% improvement over prior quarter, and our debt reduction, we finished the quarter at adjusted leverage ratio of 6.6x. We will continue to focus on deleveraging as we move through 2023,” said Kyle Lorentzen, chief financial officer, in a news release.

CommScope is a Hickory, N.C.-based provider of infrastructure services for communication networks.

First Student softens

First Student’s strip of Libor plus 300 bps term loan B and term loan C debt slid to 92¾ bid, 93¾ offered on Thursday from 93 bid, 94 offered on Wednesday in continued reaction to a ratings downgrade from Moody’s on Wednesday, according to a trader. On Tuesday, the strip of debt was quoted at 94½ bid, 95½ offered.

As previously reported, Moody’s cut the company’s corporate family rating, senior secured bank credit facilities and senior secured global notes to B1 from Ba3.

Moody’s said that the ratings downgrade reflects the company’s inability to deleverage since the July 2022 acquisition of Total Transportation.

First Student is a Cincinnati-based provider of student transportation services.

Global Healthcare tweaked

Back in the primary market, Global Healthcare Exchange firmed pricing on its $725 million term loan (B2/B-) due June 2027 at SOFR plus 475 bps, the low end of the SOFR plus 475 bps to 500 bps talk, and changed the original issue discount to 97.5 from 97, a market source remarked.

The term loan still has a 0.5% floor and 101 soft call protection for six months.

JPMorgan Chase Bank is leading the deal that will be used to extend an existing term loan from June 2024.

Global Healthcare Exchange is a Louisville, Colo.-based provider of cloud-based health care supply chain management technology and services.

Focus Financial launches

Focus Financial held a lender call at 1 p.m. ET on Thursday, launching a $500 million first-lien term loan B-6 (B1/B+) due June 30, 2028 talked at SOFR plus 350 bps with a 0.5% floor, an original issue discount of 98.5 and 101 soft call protection for six months, a market source said.

Commitments are due at noon ET on May 11, the source added.

RBC Capital Markets, Stone Point Capital Markets, Truist, Citizens, MUFG, Fifth Third, BMO Capital Markets and Capital One are leading the deal that will be used with equity to fund the buyout of the company by Clayton, Dubilier & Rice LLC for $53 in cash per share. The transaction has an enterprise value of over $7 billion.

Funds managed by Stone Point Capital LLC have agreed to retain a portion of their investment in Focus Financial and provide new equity financing as part of the proposed transaction.

Closing is expected in the third quarter, subject to stockholder approval, regulatory approvals and other customary conditions.

Focus Financial is a New York-based partnership of independent, fiduciary wealth management firms.

Alterra holds call

Alterra Mountain emerged in the morning with plans to hold a lender call at 1 p.m. ET to launch a $500 million seven-year term loan B (B1/B+) talked at SOFR+10 bps CSA plus 375 bps with a 0% floor, an original issue discount of 99 to 99.25 and 101 soft call protection for six months, according to a market source.

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

JPMorgan Chase Bank, Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Morgan Stanley Senior Funding Inc., US Bank and Wells Fargo Securities LLC are leading the deal that will be used to refinance a $310 million term loan due 2024 and for general corporate purposes, including payments associated with management incentive programs.

Alterra is a Denver-based mountain resort and adventure company.

Ryman proposed terms

Ryman Hospitality Properties came out with price talk of SOFR plus 275 bps with a 0% floor and an original issue discount of 99 on its $375 million seven-year covenant-lite term loan B (/BB-/BB+) that launched with a call in the afternoon, a market source remarked.

The term loan has no call protection.

Commitments are due at noon ET on Wednesday.

Wells Fargo Securities LLC, BofA Securities Inc., Deutsche Bank Securities Inc., JPMorgan Chase Bank and US Bank are leading the deal that will be used to refinance an existing term loan B.

Ryman is a Nashville, Tenn.-based real estate investment trust that owns and operates a portfolio of large, group-oriented hotels in urban and resort markets.

Loan indices soften

In other news, IHS Markit’s iBoxx loan indices were weaker on Wednesday, with the Leveraged Loan indexes (MiLLi) closing out the day down 0.03% and the Liquid Leveraged Loan indices (LLLi) closing out the day down 0.05%.

Month to date, the MiLLi is down 0.07% and year to date it is up 3.99%, and the LLLi is down 0.22% month to date and up 4.23% year to date.

Average secondary market bids in the U.S. on Wednesday were 91.44, down 0.03% from the previous day and down 0.48% year to date.

According to the IHS Markit data, some of the top advancers on Wednesday were Dawn Acquisition’s (AT&T Colocation) December 2018 covenant-lite term loan at 48.7, up from 47, CenturyLink/Lumen’s January 2020 covenant-lite term loan B at 69.65, up from 67.6, and Checkers Drive-In’s April 2017 term loan at 57, up from 55.67.

Some top decliners on Wednesday were CPC Acquisition’s December 2020 second-lien covenant-lite term loan at 51, down from 53, Lonza Group/Lonza Specialty’s April 2021 U.S. covenant-lite term loan B at 89.65, down from 91.81, and INW/Innovations in Nutrition + Wellness’ March 2021 covenant-lite term loan at 81.5, down from 83.33.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.