International Financing Review February 29 2020 67LOANS LEVERAGED LOANSCitizens Bank is leading the deal.
CJ Foods, rated B2/B-, is also raising a
53MûSENIORûSECUREDûlRST
LIENûREVOLVINGû
credit facility.
Pro forma for the acquisition of American
Nutrition, CJ Foods’ debt to Ebitda is roughly
6.1 times, Moody’s said.
This excludes some of management’s pro
forma Ebitda add-backs and partial credits.
When included, pro forma leverage reduces
to 4.1 times, the ratings agency said.
Debt-to-Ebitda leverage is expected to
decline to the low-to-mid 5.0 times area over
the next 12-18 months due to earnings
growth and debt repayments.
Biopharmaceutical company ALKERMES has
mOATEDûPRICEûTALKûFORûITSû53MûTERMûLOANû
"ûRElNANCING
4HEûlVE
YEARûLOANûISûBEINGûOFFEREDûATû
BPûOVERû,IBORûWITHûûmOORûATûû/)$
The loan carries 101 soft-call protection
for six months. It amortises at 1% per year.
Morgan Stanley and Cowen are lead
arrangers. Morgan Stanley is also
administrative agent.
The company is rated Ba3/BB- and the
facility is rated Ba3/BB.AMEX GBT AMENDS TERMSAMERICAN EXPRESS GLOBAL BUSINESS TRAVEL
amended the terms on a US$1.13bn debt
lNANCING
The transaction now comprises a
US$615m funded tranche and a US$515m
delayed-draw term loan, versus the initial
terms of US$615m in funded debt and a
US$605m DDTL.
The seven-year term loan B was priced at
BPûOVERû,IBORûWITHûAûûmOOR ûû/)$ûANDû
101 soft-call protection for 12 months.
American Express GBT guided the deal at
BPûOVERû,IBORûWITHûAûûmOOR ûû/)$ûANDû
101 soft-call protection for six months.
Ticking fees will now kick in from day one
of the loan at 100% of the margin, plus Libor.
Previously ticking fees worth 50% of the
margin were scheduled to start between days
46 and 90 of the DDTL, before increasing to
100% of the margin from day 91 onwards.
American Express GBT is also raising a
US$150m revolving credit facility.
Credit Suisse, Morgan Stanley, Goldman Sachs,
UBS, Bank of America and South Korea’s
Kookmin Bank led the deal.
0ROCEEDSûWILLûRElNANCEûDEBT ûFUNDûAû
shareholder distribution and go towards
ACQUISITIONûlNANCING
)Nû$ECEMBERû ûPRIVATEûEQUITYûlRMû
Carlyle Group agreed to buy a stake in
American Express GBT.
American Express GBT was a wholly-
owned unit of credit card issuer American
Express until 2014 when it sold half its stake
to an investor group led by Certares.Certares bought a 50% stake in the
company alongside the Qatar Investment
Authority, funds managed by BlackRock
and the Teacher Retirement System of
Texas.
#ERTARESûWILLûOFmOADûAûPARTûOFûITSûSTAKEûTOû
Carlyle, which invested in the travel
business alongside Singapore’s sovereign
wealth fund GIC, the University of California
/FlCEûOFûTHEû#HIEFû)NVESTMENTû/FlCERûOFûTHEû
Regents and Kaiser Permanente.
American Express will still retain 50% of
the GBT business.Jukebox music provider OCTAVE MUSIC has
lNALISEDûTHEûEXTENSIONûOFûITSûEXISTINGûTERMû
loan B and added US$60m to the facility.
The TLB priced at 525bp over Libor with a
ûmOOR ûAûû/)$ûANDûûSOFT
CALLû
protection for six months.
The TLB maturity has been extended by
four years to May 2025.
Octave guided the transaction at 500bp-
BPûOVERû,IBORûWITHûAûûmOOR
Citizens Bank arranged the deal.
Proceeds from the US$60m upsize will
pay down a second-lien term loan.Berry Global’s TLY dips after
shareholder request
US Loans drop in secondary after Canyon writes to boardPlastics maker BERRY GLOBAL‘s term loan Y
dipped last week after the company’s board
of directors received a letter from Canyon
Capital Advisors, which asked Berry to curb its
appetite for acquisitions and correct “market
misperceptions” about the sustainability of its
products.
Berry’s term loan Y, which has roughly
US$4.25bn outstanding, was quoted at an
average bid of 98.625-99.125 on Thursday after
opening the day on Monday at par, according to
investors.
“The loan was as high as par and a half
[earlier in 2020], so there is definitely some
weakness,” one investor said.
Canyon, which owns more than 9m shares
in Berry or 7% of the company’s common stock,
has requested three things of Berry. It wants
Berry to appoint an investment bank or financial
adviser to develop a “clear plan” to speed up its
deleveraging process. It also wants the company
to commit to obtaining an investment-grade
credit rating and limit mergers and acquisitions
activity to reduce debt, and to further address
environmental, social and governance themes
and misconceptions about the sustainability of
its products in the paper and packaging sector.
Canyon’s letter noted that Berry’s stock was
down 6.8% this year versus the S&P 500 partly
due to investor concerns over the company’s
product volumes. The investor also said that
Berry had failed to reassure the market of its
M&A strategy.
Confidence prevails that the company will
continue to meet its cashflow targets, said two
investors. Canyon stated similar confidence in
the letter.
“Berry is high quality in terms of the US
leveraged market,” another investor said. “They
could get to investment-grade level because they
are a decent cash producer.”The company is rated Ba3/BB+ and its first-
lien loan is rated Ba2/BBB-.
Berry has grown through acquisitions, the
most recent being its US$6.5bn purchase of UK
packaging firm RPC Group in July.
Canyon said now is an opportune time for
Berry to deleverage and sell non-core assets as
packaging companies have locked in strong Ebitda
sale multiples in recent years. Global packager
AMCOR, for example, is valued at a 4.0-5.0 times
Ebitda premium to Berry due to a less-leveraged
capital structure, Canyon said in its letter.GETTING OUT FRONT
As a plastics and packaging company, firms such
as Berry have faced criticism for the adverse
effects that plastic can have on the environment,
and industry players have been quick to promote
ESG measures in their business practices.
Nestle has committed US$2bn to develop
food-grade recycled plastic resins and Unilever
has transitioned some of the packaging it uses to
recycled materials, Canyon said.
Canyon, however, said Berry should “get
in front” of ESG trends and “correct” market
misconceptions about how sustainable its
products can be. It also noted that Berry has
announced a collaboration with Saudi Arabian
chemicals company Sabic to use recycled resins
that form some of its plastics.
“Although the company has been more vocal
with ESG issues, faulty market perceptions have
proven difficult to alter,” Canyon said in the
letter addressed to Berry chief executive Thomas
Salmon.
The investment firm urged Berry to prioritise
ESG ratings and said the company was behind
the rest of the market.
Berry went public via an IPO on the New York
Stock Exchange in October 2012.
Aaron Weinman9 IFR Loans 2322 p 55 - 72 .indd 67 28 / 02 / 2020 18 : 11 : 32