Advantage Sales launches $1.6 billion term loan at Libor plus 450 bps

By Sara Rosenberg

New York, Oct. 14 – Advantage Sales & Marketing Inc. launched on Wednesday a $1.6 billion seven-year covenant-lite first-lien term loan that is talked at Libor plus 450 basis points with a 0.75% Libor floor and an original issue discount of 98.5, according to a market source.

The term loan has 101 soft call protection for six months and amortization of 1% per annum.

Mandatory prepayments are from a 50% excess cash flow sweep with step-downs to 25% and 0% when first-lien net leverage is 0.5x and 1x inside closing date first-lien net leverage, respectively, 100% of asset sales net proceeds with step-down to 50% and 0% when first-lien net leverage is 0.5x and 1x inside closing date first-lien net leverage, respectively, and 100% of debt issuances excluding permitted debt, the company revealed in a DEFA14A filed with the Securities and Exchange Commission.

Incremental facilities capacity is the greater of 100% of closing date EBITDA and 100% of LTM consolidated EBITDA plus, for first-lien debt unlimited up to 4x closing date first-lien net leverage, for junior liens unlimited up to 4x secured net leverage, and for unsecured unlimited up to 4x total net leverage or 2x interest coverage.

The company’s $2 billion of credit facilities also include a $400 million five-year asset-based revolver priced at Libor plus 225 bps with a 0.5% Libor floor and a 37.5 bps commitment fee. After the first fiscal quarter following the closing date, pricing will be based on a grid ranging from Libor plus 200 bps to 250 bps based on excess availability. The commitment fee can drop to 25 bps if utilization is 50% or less of the maximum borrowing amount.

BofA Securities Inc., Morgan Stanley Senior Funding Inc., Deutsche Bank Securities Inc. and Apollo are the leads on the deal.

Commitments are due at 5 p.m. ET on Oct. 22.

Proceeds will be used to refinance an accounts receivable securitization facility, $2.455 billion of first-lien term loan B1/B2 debt and a $760 million second-lien term loan.

The refinancing is being done in connection with the acquisition of Advantage Sales’ parent company, Advantage Solutions Inc., by Conyers Park II Acquisition Corp., a publicly traded special purpose acquisition company.

Other funds for the transaction will come from $500 million of other senior secured debt and $1.154 billion in cash and equity.

First-lien/total leverage is 4.1x and net leverage is 3.8x based on LTM June 30 adjusted EBITDA of $508 million.

Closing is expected as early as late October, subject to approval by Conyers Park’s stockholders, the expiration of the HSR Act waiting period, the debt financing and other customary conditions.

Advantage Sales is an Irvine, Calif.-based provider of outsourced sales and marketing services to consumer goods manufacturers and retailers.

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