OpenText, USI, Formula 1 free to trade; Grab rises on tender; Focus, Four Seasons revised

By Sara Rosenberg

New York, Nov. 16 – OpenText Corp. increased the size of its term loan B and firmed the original issue discount at the tight end of guidance, and USI Inc. modified the issue price on its term loan for a second time, and then these deals made their way into the secondary market on Wednesday.

Also, Formula 1 finalized the original issue discount on its term loan B at the tight end of revised talk before breaking for trading, and Grab Holdings Inc.’s term loan B rose a couple of points after the company launched a Dutch auction tender offer for some of the term loan B debt.

In more happenings, Focus Financial Partners LLC shifted funds to its term loan B from its term loan A and firmed the original issue discount on the B loan at the tight side of talk, and Four Seasons Hotels and Resorts set the spread on its first-lien term loan B at the low end of guidance and tightened issue price talk.

OpenText upsized

OpenText raised its seven-year senior secured term loan B (Ba1/BBB-/BBB-) to $3.585 billion from $3.085 billion and set the original issue discount at 97, the tight end of the 96 to 97 talk, a market source remarked.

As before, the term loan is priced at SOFR+10 basis points CSA plus 350 bps with a 0.5% floor, and has 101 soft call protection for six months.

Barclays, BMO Capital Markets Corp., RBC Capital Markets, Citigroup Global Markets Inc., MUFG, HSBC Securities (USA) Inc., PNC Capital Markets, National Bank of Canada and CIBC are leading the deal.

The new term loan B will be used with $1 billion of senior secured notes, downsized from $1.5 billion, to fund the acquisition of Micro Focus International for 532 pence per share, implying an enterprise value of about $6 billion inclusive of Micro Focus’ cash and debt.

OpenText breaks

Commitments for OpenText’s term loan B continued to be due at noon ET on Wednesday and the debt freed to trade in the afternoon, with one trader quoting it at 97¼ bid, 98¼ offered and another trader quoting it at 97¼ bid, 97¾ offered.

Closing on the acquisition is expected in the first quarter of 2023, subject to Micro Focus shareholder approval, the sanction of the Scheme by the Court, and antitrust and foreign investment approvals.

OpenText is a Waterloo, Ont.-based software provider of business-to-business cloud integration services. Micro Focus is a Newbury, England-based enterprise software company.

USI tweaked, trades

USI modified the original issue discount on its $2.5 billion term loan due 2029 (B1/B) to 98 from revised talk of 97.5 and initial talk of 97, a market source said.

Pricing on the term loan remained at SOFR plus 375 bps with a 0.5% floor, and the debt still has 101 soft call protection for six months and no CSA.

Previously in syndication, pricing on the term loan was lowered from SOFR plus 400 bps.

Recommitments were due at 10 a.m. ET on Wednesday and the term loan was quoted by one trader at 98¼ bid, 98 5/8 offered after it broke for trading during the session.

JPMorgan Chase Bank and KKR Capital Markets are leading the deal. BofA Securities Inc. is the administrative agent.

The new loan will be used to refinance an existing $2.48 billion term loan due May 2024.

USI is a Valhalla, N.Y.-based insurance brokerage and consulting firm.

Formula 1 updated

Formula 1 set the original issue discount on its $1.7 billion term loan B due Jan. 15, 2030 at 99, the tight end of revised talk of 98.5 to 99 and tighter than initial talk in the range of 97.5 to 98, a market source remarked.

The term loan B is priced at SOFR plus 325 bps with a 25 bps step-down at 0.5x inside closing date first-lien net leverage and a 0.5% floor, and has 101 soft call protection for six months.

Earlier in syndication, pricing on the term loan B firmed at the low end of the SOFR plus 325 bps to 350 bps talk and the step-down was added.

The company is also getting a $725 million term loan A.

The $2.425 billion of term loans (BB/BB+) will be used with cash on the balance sheet to refinance an existing term loan B due February 2024.

Formula 1 frees

Late in the day, Formula 1’s term loan B hit the secondary market, with levels quoted at 99¼ bid, par offered, another source added.

Goldman Sachs Bank USA, JPMorgan Chase Bank, BNP Paribas Securities Corp., BofA Securities Inc., Mizuho, NatWest, Societe Generale, TD Securities (USA) LLC, Truist, Citigroup Global Markets Inc., Credit Agricole, Morgan Stanley Senior Funding Inc., MUFG, CIBC and Credit Suisse Securities (USA) LLC are leading the debt.

Formula 1 is a media company that is the exclusive commercial rights holder to FIA Formula One World Championship auto racing.

Grab heads higher

Grab Holdings’ $1.97 billion term loan B due 2026 rose to 97¼ bid, 98¼ offered in trading on Wednesday from 94¼ bid, 95¼ offered on Tuesday due to the morning launch by the company of a Dutch auction tender offer for up to $750 million of the debt at a price in the range of 95 to par, according to a trader.

The tender offer expires at noon ET on Friday.

JPMorgan Chase Bank is the lead on the deal.

Funds for the tender offer will come from cash on hand.

Grab is a Singapore-based ride hailing company and a provider of food delivery, digital payments and other financial services via a mobile app.

Focus reworked

Focus Financial lifted its term loan B due June 30, 2028 to $1.75 billion from $1.65 billion and set the original issue discount at 98, the tight end of the 97 to 98 talk, a market source said.

Furthermore, the company scaled back its delayed-draw term loan A to $250 million from $350 million.

As before, the term loan B is priced at SOFR plus 325 bps with a 0.5% floor, and has 101 soft call protection for six months and no CSA.

Commitments are due at noon ET on Thursday, accelerated from noon ET on Monday, the source added.

RBC Capital Markets, Stone Point Capital Markets, BMO Capital Markets, Truist, BofA Securities Inc., Capital One, Fifth Third, MUFG, Citizens, Huntington and others to be named are leading the deal (Ba3/BB-) that will be used to refinance existing debt, including an existing first-lien term loan, and for general corporate purposes, which may include acquisitions.

The company is also extending its $650 million revolver from June 2024.

Focus is a New York-based partnership of independent, fiduciary wealth management firms operating in the registered investment advisor industry.

Four Seasons revised

Four Seasons Hotels and Resorts set pricing on its $850 million seven-year senior secured first-lien term loan B (Ba3/BB+) at SOFR plus 325 bps, the low end of the SOFR plus 325 bps to 350 bps talk, and changed the original issue discount talk to a range of 98 to 98.5 from 97, a market source remarked.

The term loan still has 10 bps CSA, a 0.5% floor and 101 soft call protection for six months.

Commitments continue to be due at noon ET on Thursday, the source added. Cashless roll signature pages remained due at 5 p.m. ET on Wednesday.

Citigroup Global Markets Inc. and Morgan Stanley Senior Funding Inc. are leading the deal that will be used to refinance an existing senior secured first-lien term loan due November 2023 and pay related fees and expenses.

Closing is expected on Nov. 30.

Four Seasons is a Toronto-based luxury hotels company.

Fund flows

In other news, actively managed loan fund flows on Tuesday were negative $209 million and loan ETFs were positive $13 million, according to market sources.

Tuesday’s increase in outflows for actively managed loan funds were fairly concentrated, sources added.

Loan indices rise

IHS Markit’s iBoxx loan indices were stronger on Tuesday, with the Leveraged Loan indexes (MiLLi) closing out the day up 0.10% and the Liquid Leveraged Loan indices (LLLi) closing out the day up 0.14%.

Month to date, the MiLLi is up 1.21% and year to date its down 1.58%. The LLLi is up 1.36% month to date and down 2.12% year to date.

Average secondary market bids in the U.S. on Tuesday were 92.52, down 0.03% from the previous day and down 4.47% year to date.

According to the IHS Markit data, some of the top advancers on Tuesday were Envision Healthcare’s July 2022 second-out covenant-lite term loan at 40, up from 38.67, Prince International/Chromaflo/Ferro’s April 2022 covenant-lite term loan B at 85.30, up from 82.56, and US LBM’s December 2020 covenant-lite term loan B at 90.25, up from 87.88.

Some top decliners on Tuesday were Mitel Networks’ November 2018 covenant-lite fourth out no roll-up term loan at 28.75, down from 30.40, National CineMedia’s June 2018 term loan B at 37.30, down from 38.98, and Imprivata’s December 2020 covenant-lite term loan at 93.83, down from 97.34.

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