LOANS LEVERAGED LOANSwill support the company’s acquisition by
private investor Onex.
4HEûSEVEN
YEARûlRST
LIENû4,"ûISûBEINGû
offered between 300bp-325bp over Libor,
WITHûAûûmOOR ûû/)$ûANDûûSOFT
CALLû
protection for six months.
)NûADDITION ûTHEûlNANCINGûINCLUDESûAû
US$350m revolving credit facility.
Barclays is the administrative agent, while
Morgan Stanley, RBC, Citigroup, UBS, BMO
Capital Markets, Scotiabank and TD Securities
are arrangers.
Corporate ratings are Ba3/B+/BB- and the
lRST
LIENû4,"ûWILLûBEûRATEDû"A""
""
Adjusted debt-to-Ebitda is expected to be
in the mid-4.0 times area over the next two
years, S&P said.
WestJet’s debt structure is also likely to
comprise a further C$520m (US$395m)
worth of loans from Export Development
Canada, which will be held by subsidiary
WestJet Encore, S&P said.
/NEXûANDûITSûAFlLIATEDûFUNDSûBOUGHTû
WestJet’s outstanding shares for C$31
apiece. The transaction is valued at
approximately US$5bn, including assumed
debt.
"ILLBOARDûADVERTISINGûlRMûCLEAR CHANNEL
OUTDOOR has launched a US$2bn term loan B
THATûWILLûRElNANCEûDEBT
4HEûlRST
LIENûSEVEN
YEARû4,"ûISûBEINGû
guided at 350bp and 375bp over Libor, with
AûûmOOR ûû/)$ûANDûûSOFT
CALLû
protection for six months.
The covenant-lite TLB will amortise at 1%
annually.
Morgan Stanley, Deutsche Bank and JP Morgan
are joint lead arrangers and bookrunners.
Deutsche Bank is also administrative agent.
0ROCEEDSûWILLûRElNANCEûDEBTûANDûPAYû
related fees and expenses.
Clear Channel Outdoor said on July 25
that it priced a public offering of 100m
shares in common stock at US$3.5 apiece.
Proceeds from the share sale will redeem
roughly US$334m in outstanding principal
on senior subordinated bonds maturing in
- The bond issuer is subsidiary Clear
Channel Worldwide and pays a 9.25%
coupon.
Pharmacy care provider SHIELDS HEALTH
SOLUTIONS is in the market with a US$200m
term loan B that will fund its acquisition by
PRIVATEûEQUITYûlRMû7ELSH û#ARSON û!NDERSONû
& Stowe.
Credit Suisse is leading the seven-year
lRST
LIENû4," ûWHICHûISûOFFEREDûATûBP
BPûOVERû,IBOR ûWITHûAûûmOOR ûû/)$ûANDû
101 soft-call protection for six months.
4HEûlNANCINGûALSOûFEATURESûAû53Mû
revolving credit facility.
#ORPORATEûANDûlRST
LIENûRATINGSûAREû""
WCAS and Walgreens have agreed to
make equity investments into Shields
Health.
CEC MARKETS US$760m TLB REFI&AMILYûDININGûOPERATORûCEC ENTERTAINMENT has
launched a US$760m term loan B that will
RElNANCEûDEBT
4HEûSEVEN
YEARûlRST
LIENû4,"ûISûBEINGû
offered at 550bp-575bp over Libor, with a 0%
mOOR ûû/)$ûANDûûSOFT
CALLûPROTECTIONûFORû
six months.
Credit Suisse is leading the transaction.
#ORPORATEûRATINGSûAREû""
ûWHILEûlRST
lien facility ratings are B2/B-.Proceeds will also fund cash to the
balance sheet and general corporate
purposes.
CEC Entertainment operates Chuck E
Cheese family entertainment centres and
Peter Piper Pizza restaurants.
)Nû&EBRUARYû û#%#ûRAISEDû53Mû
through a seven-year TLB that backed its
US$1.3bn buyout by Apollo Global
Management.
That loan priced at 325bp over Libor with
AûûmOORLBO loans stack up over
summer
US Injection of new money deals allows investors to be more selectiveLeveraged buyouts are crowding the loan
pipeline, with a series of transactions giving
investors their fill of new money deals that are
expected to price in early August.
Borrowers including internet security provider
DIGICERT, insurance technology company SEDGWICK
and Canadian airline WESTJET all launched
acquisition-related loans in excess of US$1bn last
week, taking advantage of a split marketplace
rewarding well-known borrowers above highly-
leveraged, Single B rated companies.
“We’re seeing a steady flow of new issuance
in the term loan B market,” said Arturo de Pena,
head of loan syndicate and distribution at MUFG
Securities. “As a result, the market technicals are
balanced, allowing investors to be selective.”
Investor appetite allowed auto racing body
NASCAR to tighten the spread on a recent Ba2/
BB rated US$1.41bn loan by 25bp to 275bp over
Libor, and B3/B rated healthcare analytics firm
PRESS GANEY to shave 25bp off its US$1.25bn TLB
to clear at 350bp over Libor.
“These are trusted borrowers the market
loves,” said a portfolio manager at a US private
equity shop. “But then you look down the
spectrum, Single B names in cyclical industries
are facing additional investor scrutiny.”
At the end of July, chemicals firm INEOS
ENTERPRISES offered a series of lender-friendly
amendments to documentation attached to its
more than US$1bn in dual-currency loans. The
most-favoured nation clause, which ensures all
lenders are treated equally if the company tacks
on incremental debt, was set at 50bp for 24
months as opposed to 12 months, while the cap
on Ebitda add-backs – proposed cost savings
designed to reduce leverage – was lowered.
“Investors want MFN protection and more
controls on restricted payments. They also
want to tighten lending structures in order to
avoid potential leakage of capital from first-lien
lenders,” added de Pena.PRIVATE EQUITY POUNCES
After a tepid start to the year, new loan issuance
in the last two weeks has spiked thanks in part
to private equity-backed acquisition financings,
which are keeping investors busy at a time of
year when the market typically takes a step back
for summer.
“I do expect another wave of LBOs through
September and incrementals for
acquisition-type deals,” said Ryan Kohan,
a portfolio manager with Western Asset
Management. “They are mid-range in size,
but we’ve seen a step-up in PE-driven LBOs,
which is good for supply.”
DigiCert’s proposed US$1.55bn seven-year
loan will fund its acquisition by Clearlake Capital
and WestJet’s US$1.955bn loan will support its
takeover by private investor Onex.
While most transactions in the market,
generally in the US$800m-$1bn mark, pale
in comparison to the multibillion-dollar deals
seen over the last two years, market sources are
buoyed by the new money flowing into leveraged
loans.
New money continues to lag in comparison to
2018, logging roughly US$89.4bn for the second
quarter of 2019 compared to US$124.8bn a year
earlier.
The pipeline is still dominated by refinancing
and incremental transactions, but the uptick in
acquisition-linked financing and a healthy dose
of investor pushback have some confident that a
bifurcated asset class will more accurately reflect
credit risk in leveraged loans.
“Investors’ approach to credit is idiosyncratic.
They’re demanding wider spreads and tighter
structures to be compensated appropriately for
higher risk,” said MUFG’s de Pena, adding that
conversely, performing credits that are known to
the market are pricing inside or at the low end of
guidance.
Aaron Weinman