Covetrus finalizes $1.53 billion first-lien term loan OID at 94

By Sara Rosenberg

New York, Sept. 20 – Covetrus Inc. (Corgi BidCo Inc.) set the original issue discount on its $1.525 billion seven-year covenant-lite first-lien term loan (B1/B-) at 94, the wide end of revised talk of 94 to 95 and wide of initial talk in the range of 95 to 96, according to a market source.

Pricing on the first-lien term loan is SOFR plus 500 basis points with a 0.5% floor.

The term loan has 101 soft call protection for one year.

Previously in syndication, pricing on the first-lien term loan firmed at the high end of the SOFR plus 475 bps to 500 bps talk and the call protection was extended from six months. There were also a number of modifications to documentation, including to MFN, accordion, pari passu debt, business line exception, asset sale, excess cash flow sweep, other ratio debt, general restricted payment basket, unlimited investments, EBITDA cost savings and synergies, minimum consolidated coverage ratio for acquisitions and investments, ratio liens basket, available amount and post-IPO restricted payment basket. And, the restricted payment debt basket and the investments in joint ventures basket were removed, J. Crew and Chewy provisions were added and quarterly lender calls were added.

Deutsche Bank Securities Inc., UBS Investment Bank, BMO Capital Markets, Mizuho Securities USA LLC, TD Securities (USA) LLC, Santander Bank and ING Capital LLC are the bookrunners on the deal, with Deutsche the left lead and administrative agent.

The company is also getting a $350 million privately placed second-lien term loan.

In addition, based on the commitment letter, the company is expected to get a $300 million five-year revolving credit facility.

Proceeds will be used to help fund the buyout of the company by Clayton, Dubilier & Rice and TPG Capital for $21.00 per share in cash, representing an enterprise value of about $4 billion.

Clayton, Dubilier & Rice currently owns around 24% of the company’s outstanding shares of common stock.

Other funds for the transaction will come from equity.

Closing is expected this year, subject to Covetrus shareholder approval and other customary conditions.

Covetrus is a Portland, Me.-based animal-health technology and services company.

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