Sotera term loan B rises with settlement news; RelaDyne, Ciena price guidance surfaces

By Sara Rosenberg

New York, Jan. 10 – Sotera Health Co.’s term loan B rose by a few points in the secondary market on Tuesday following news that its subsidiary, Sterigenics, entered into agreements to settle ethylene oxide cases in Illinois.

Meanwhile, in the primary market, RelaDyne Inc. released price talk on its incremental first-lien term loan B in connection with its lender call, and Ciena Corp. disclosed pricing guidance on its term loan B with launch.

Sotera strengthens

Sotera’s term loan B moved higher in trading after the company announced that its subsidiaries have reached agreements to settle the more than 870 ethylene oxide cases pending against Sterigenics in the Circuit Court of Cook County, Illinois, and US District Court for the Northern District of Illinois, a market source said.

The term loan B was quoted at 96 bid, 97 offered, up from 93¼ bid, 94¼ offered, the source added.

Under the agreement, Sterigenics will pay $408 million to settle the claims, subject to substantially all of the plaintiffs providing opt-in consents to their individual settlement allocations and dismissing their claims with prejudice, the company disclosed in an 8-K filed with the Securities and Exchange Commission.

Sterigenics will fund an escrow account to pay the settlement by May 1, 2023.

The company plans to pursue incremental debt financing in the first half of 2023 to fund a significant portion of the settlement payment, and will record a charge for the $408 million settlement for the year ended 2022.

According to the 8-K, the debt financing may include secured debt raised in the bank or capital markets, which may increase the company’s leverage above its long-term target net leverage range of 2x to 4x.

Sotera is a Broadview Heights, Ohio-based provider of mission-critical end-to-end sterilization solutions and lab testing and advisory services. Sterigenics is a provider of outsourced terminal sterilization and irradiation services for the medical device, pharmaceutical, food safety and advanced applications markets.

RelaDyne proposed terms

Moving to the primary market, RelaDyne held its lender call on Tuesday morning and announced talk on its non-fungible $200 million incremental first-lien term loan B due December 2028 at SOFR plus 500 basis points to 525 bps with a 0.5% floor, an original issue discount of 96 and 101 soft call protection for six months, a market source remarked. There is no CSA on the loan.

Commitments are due at noon ET on Jan. 18, the source added.

RBC Capital Markets, BMO Capital Markets, KeyBanc Capital Markets, Macquarie Capital (USA) Inc., Fifth Third, US Bank and others to be named later are leading the deal that will be used to fund the acquisitions of Allied Oil, a distributor of lubricants, diesel exhaust fluid, and industrial services, and Grupo Lucalza, a distributor of lubricants, fuel, and related automotive supplies.

RelaDyne is a Cincinnati-based provider of lubricant and fuel sales & distribution and equipment reliability services to the industrial, commercial, and automotive industries.

Ciena price talk

Ciena came out with talk of SOFR plus 275 bps with a 0% floor and an original issue discount of 99 on its $400 million seven-year term loan B (Baa3/BB+) that launched with a call in the morning, according to a market source.

The term loan has 101 soft call protection for six months and no CSA.

Commitments are due at noon ET on Thursday, accelerated from an originally planned deadline of noon ET on Friday, the source added.

BofA Securities Inc., JPMorgan Chase Bank, Goldman Sachs Bank USA, Wells Fargo Securities LLC and others to be named are leading the deal that will be used to support the acquisition of Tibit Communications Inc., a Petaluma, Calif.-based provider of open, microplug OLT technology that enables rapid PON deployment, for $210 million, to support the already completed acquisition of Benu Networks Inc., a Burlington, Mass.-based provider of cloud-native software solutions, to add cash to the balance sheet and for general corporate purposes.

The Tibit transaction is expected to close during Ciena’s fiscal first quarter 2023, subject to customary conditions.

Ciena is a Hanover, Md.-based networking systems, services and software company.

Fund flows

In other news, actively managed loan fund flows on Monday were negative $42 million and loan ETFs were positive $57 million, market sources said.

Outflows for loan funds week to date total an estimated $148 million, following outflows in the prior week of $587 million, sources added.

Loan indices rise

IHS Markit’s iBoxx loan indices were stronger on Monday, with the Leveraged Loan indexes (MiLLi) closing out the day up 0.36% and the Liquid Leveraged Loan indices (LLLi) closing out the day up 0.38%.

Month to date, the MiLLi is up 1.01% and the LLLi is up 1.26%.

Average secondary market bids in the U.S. on Monday were 92.17, up 0.13% from the previous day and up 0.24% year to date.

According to the IHS Markit data, some of the top advancers on Monday were RSA Security’s April 2021 term loan at 71.75, up from 69.40, City Brewing’s April 2021 covenant-lite term loan at 44.04, up from 42.79, and Dell Software’s (Quest/One Identity) February 2022 covenant-lite term loan at 81.17, up from 79.18.

Some top decliners on Monday were Mitel Networks’ November 2018 covenant-lite fourth out no roll up term loan at 24.30, down from 26.54, Tradesmen/Tribe Buyer’s February 2017 term loan at 61, down from 65, and Fox US Bidco/Robertshaw’s February 2018 covenant-lite term loan B at 66.43, down from 68.25.

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