Equinox term loan gains post earnings news; Kymera finalizes incremental pricing terms

By Sara Rosenberg

New York, Aug. 11 – Equinox Holdings Inc.’s first-lien term loan moved higher in the secondary market on Friday after the company released financial results to lenders, while Air Canada’s term loan held steady with its second quarter earnings announcement.

Meanwhile, in the primary market, Kymera International set the spread on its incremental term loan at the low end of guidance and firmed the original issue discount at the tight end of talk.

In addition, Tacala Cos. completed syndication of its add-on first-lien term loan in line with initial talk, and CHG Healthcare joined the near-term primary calendar.

Equinox rises

Equinox Holdings’ first-lien term loan due 2024 that is priced at SOFR plus 300 basis points rose to 95½ bid, 97 offered on Friday from 94¼ bid, 95½ offered on Thursday, according to a market source.

The source said that the debt traded up after the company posted financial numbers to lenders.

The company’s second-lien term loan was unchanged on the news at 80 bid, 83 offered, the source added.

Equinox is a New York-based exercise and fitness company.

Air Canada steady

Air Canada’s term loan B due 2028 was quoted at 99¾ bid, par ½ offered on Friday, unchanged from the previous day’s levels as the company released second quarter numbers, a market source said.

For the quarter, the company reported revenues of C$5.427 billion, an increase of C$1.446 billion from the same quarter in 2022, and net income of C$838 million, or C$2.34 per diluted share, versus a net loss of C$386 million, or a loss of C$1.60 per diluted share, in the comparable period last year.

Operating income for the quarter was C$802 million, an improvement of over C$1 billion from an operating loss of C$253 million in the second quarter of 2022, and adjusted EBITDA was C$1.22 billion, an increase of C$1.066 billion from the comparable period last in the prior year.

Net debt-to-adjusted EBITDA was 1.7x at June 30, an improvement from 3.2x at March 30 and 5.1x at Dec. 31, 2022, due to growth in adjusted EBITDA and the reduction in net debt.

Air Canada is a Montreal-based airline company.

Kymera updated

Moving to the primary market, Kymera International finalized pricing on its non-fungible $100 million incremental term loan (B3/B-) due October 2025 at SOFR plus 600 bps, the low end of the SOFR plus 600 bps to 625 bps talk, and firmed the original issue discount at 96, the tight end of the 95 to 96 talk, according to a market source.

As before, the incremental term loan has a 0.5% floor and no call protection.

Goldman Sachs Bank USA and M&T Bank are leading the deal that will be used to pay down borrowings under the company’s ABL facility, put cash on the balance sheet, and pay related fees and expenses.

Palladium Equity Partners is the sponsor.

Kymera is a Research Triangle Park, N.C.-based specialty materials manufacturer and service provider, specializing in metal-based powders, custom alloys and coatings across a wide range of end markets.

Tacala wraps loan

Tacala successfully syndicated its fungible $85 million add-on first-lien term loan in lien with talk of SOFR+CSA plus 425 bps with a 0.75% floor and an original issue discount of 98, a market source remarked. CSA is the ARRC standard of 11.448 bps one-month rate, 26.161 bps three-month rate and 42.826 bps six-month rate.

Allocations went out on Thursday night, the source added.

KKR Capital Markets and Wells Fargo Securities LLC are leading the deal that will be used with cash on hand to pay a $140 million dividend.

The company is also getting a $25 million add-on revolver, which will increase the total revolver size to $55 million.

In connection with this transaction, the company is repricing its existing first-lien term loan to SOFR+ARRC CSA plus 425 bps with a 0.75% floor from SOFR+ARRC CSA plus 350 bps with a 0.75% floor and its existing second-lien term loan to SOFR+ARRC CSA plus 800 bps with a 0.75% floor from SOFR+ARRC CSA plus 750 bps with a 0.75% floor.

Existing lenders were not offered an amendment fee for this transaction.

Tacala is a Vestavia Hills, Ala.-based franchise operator of Taco Bell restaurants.

CHG readies deal

CHG Healthcare set a lender call for 2 p.m. ET on Monday to launch a new term loan financing, according to a market source.

Goldman Sachs Bank USA is the left lead on the deal.

Ares, LGP and GIC are the sponsors.

CHG is a Salt Lake City-based private healthcare staffing company that specializes in temporary physician staffing services.

Fund flows

In other news, actively managed loan fund flows on Thursday were negative $50 million and loan ETFs were positive $4 million, market sources said.

Weekly outflows for loan funds totaled $182 million, including negative $48 million ETFs.

Loan funds have reported a net $479 million outflow over the last 10 weeks, or a weekly average outflow of $48 million, compared to net outflows totaling $13.7 billion or a $624 million average weekly outflow from January through May, sources continued.

Year to date, outflows for loan funds total $19.3 billion, with negative $903 million ETFs, sources added.

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