Catalent drops with expected guidance change; Focus accelerated; Atlantic Aviation sets talk

By Sara Rosenberg

New York, May 8 – Catalent Inc.’s term loan headed lower in the secondary market on Monday after the company announced that it expects to reduce both its fiscal 2023 net revenue and adjusted EBITDA guidance and is delaying the release of its third fiscal quarter results by about a week.

Meanwhile, in the primary market, Focus Financial moved up the commitment deadline for its first-lien term loan B-6, and Atlantic Aviation (KKR Apple Bidco LLC) released price talk with launch.

Also, Nouryon, KinderCare Learning Cos. and Cvent Holding Corp. (Capstone Borrower Inc.) joined this week’s new issue calendar.

Catalent softens

Catalent’s term loan weakened in trading to 95½ bid, 97½ offered on Monday from 98½ bid, 99¼ offered on Friday in reaction to news that net revenue and adjusted EBITDA guidance is expected to be lowered and the release of earnings is being delayed, according to a trader.

Due to productivity issues and higher-than-expected costs at three of the company’s facilities, significant issues with its forecasts over the past year that have recently been identified and potential non-cash adjustments related to its operations in Bloomington, Ind., Catalent expects to significantly reduce both its fiscal 2023 net revenue and adjusted EBITDA guidance by more than $400 million each, the company said in a news release on Monday morning.

In addition, the company expects that its income statement and balance sheet will reflect a goodwill impairment in our consumer health business of more than $200 million, primarily related to its October 2021 acquisition of Bettera Wellness.

The company also disclosed that it is postponing the release of its third fiscal quarter results to May 15 from May 9 as it needs more time to review the potential non-cash adjustments related to Bloomington, Ind.

Catalent is a Somerset, N.J.-based provider of development sciences and manufacturing platforms for medicines.

Focus tweaks timing

Moving to the primary market, Focus Financial accelerated the commitment deadline for its $500 million first-lien term loan B-6 (B1/B+) due June 30, 2028 to 5 p.m. ET on Tuesday from noon ET on Thursday, a market source remarked.

Talk on the term loan B-6 is SOFR plus 350 basis points with a 0.5% floor and an original issue discount of 98.5, and the debt has 101 soft call protection for six months.

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.

Atlantic holds call

Atlantic Aviation held a lender call at noon ET on Monday to launch a fungible $750 million incremental first-lien term loan (B2) due September 2028 that is talked with an original issue discount of 98.5 to 99, according to a market source.

The incremental term loan is priced at SOFR plus 400 bps with a 0.5% floor.

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

KKR Capital Markets is the left lead on the deal, which will be used to repay a second-lien term loan and fund a shareholder distribution.

Atlantic Aviation is an operator of fixed base operations, providing a full suite of critical services to the private aviation sector.

Nouryon joins calendar

Nouryon scheduled a lender call for 10:30 a.m. ET on Tuesday and will hold small group meetings on Wednesday and Thursday to launch a minimum $2.5 billion first-lien term loan B due April 3, 2028 and a minimum €1.2 billion first-lien term loan B due April 3, 2028, a market source said.

Talk on the U.S. term loan is SOFR+10 bps CSA plus 400 bps with a 0% floor and an original issue discount of 98.5 to 99, and talk on the euro term loan is Euribor plus 425 bps to 450 bps with a 0% floor and a discount of 98, the source continued. Call protection is a 101 soft call until Oct. 3, 2023.

Commitments are due at 5 p.m. ET on May 17 for the U.S. term loan and at noon ET on May 17 for the euro term loan, the source added.

JPMorgan Chase Bank is the left bookrunner on the U.S. loan. Barclays, HSBC and JPMorgan are joint global coordinators and joint physical bookrunners on the euro loan. JPMorgan is the administrative agent.

The loans (B2) will be used by the Amsterdam-based specialty chemicals company to amend and extend a portion of its existing $3.2 billion term loan B due October 2025 and a portion of its existing €1.7 billion term loan B due October 2025, and to pay transaction fees and expenses.

KinderCare on deck

KinderCare set a lender call for 10 a.m. ET on Tuesday to launch a $1.4 billion seven-year first-lien term loan (B2), according to a market source.

Barclays, Goldman Sachs Bank USA, Macquarie Capital (USA) Inc., Deutsche Bank Securities Inc., UBS Investment Bank, BofA Securities Inc., Jefferies LLC and KKR Capital Markets are leading the deal that will be used to fully refinance the company’s existing debt and pay related fees and expenses.

KinderCare is a Lake Oswego, Ore.-based provider of private early childhood care and education.

Cvent readies deal

Cvent emerged with plans to hold a lender call at 2:30 p.m. ET on Tuesday to launch $515 million of credit facilities, split between a $115 million revolver and a $400 million first-lien senior secured term loan B, a market source remarked.

Morgan Stanley Senior Funding Inc. is the left lead arranger on the deal. The debt commitment had UBS Securities LLC and Citizens Bank listed as leads as well.

The credit facilities will be used with $500 million of other secured debt and equity to fund the buyout of the company by Blackstone for $8.50 per share in cash, or about $4.6 billion, to refinance existing credit facilities, and to pay fees and expenses related to the transaction.

A wholly owned subsidiary of the Abu Dhabi Investment Authority will be a significant minority investor alongside Blackstone as part of the buyout, and Vista Equity Partners, a majority stockholder of Cvent, has agreed to invest a portion of its proceeds as non-convertible preferred stock in financing for the transaction.

Closing is expected mid-year, subject to customary conditions, including receipt of approval by Cvent’s stockholders and regulatory approvals.

Cvent is a Tysons, Va.-based provider of meetings, events and hospitality technology.

Fund flows

In other news, actively managed loan fund flows on Friday were negative $127 million and loan ETFs were negative $10 million, according to market sources.

Outflows for loan funds this year total $14.2 billion, sources added.

Loan indices mixed

In other news, IHS Markit’s iBoxx loan indices were mixed on Friday, with the Leveraged Loan indexes (MiLLi) closing out the day unchanged and the Liquid Leveraged Loan indices (LLLi) closing out the day up 0.03%.

Month to date, the MiLLi is down 0.19% and year to date it is up 3.85%, and the LLLi is down 0.38% month to date and up 4.07% year to date.

Average secondary market bids in the U.S. on Friday were 91.27, down 0.04% from the previous day and down 0.66% year to date.

According to the IHS Markit data, some of the top advancers on Friday were Checkers Drive-In’s April 2017 term loan at 56.5, up from 53, National CineMedia’s June 2018 term loan B at 31.23, up from 29.7, and HealthChannels’ April 2018 covenant-lite term loan at 59, up from 56.5.

Some top decliners on Friday were DTZ/Cushman’s January 2020 covenant-lite term loan B at 94, down from 97.88, Packers Sanitation Services/PSSI’s March 2021 covenant-lite term loan at 41.94, down from 43.31, and Trinseo’s May 2018 covenant-lite term loan at 95, down from 97.08.

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