IFR - 07.07.2018

LOANS LEVERAGED LOANS

SOFTûCALLûPROTECTIONûFORûSIXûMONTHSûANDû
there is a springer on the revolving credit
facility.
Bank of America Merrill Lynch and HSBC are
bookrunners and mandated lead arrangers
on the deal, which closes on July 18.

IMERYS ROOFING FIRM SEEKS LOAN

Lone Star has launched €670m of loans
backing its carve-out of French group
IMERYSûROOlNGûBUSINESS
The deal comprises a €580m seven-year
Term Loan B and a €90m 6.5-year revolving
credit facility.
The TLB is guided at 475bp over Euribor
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Barclays, Credit Suisse and NatWest Markets
are bookrunners.
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business for €1bn in May at a multiple of
nearly 9 times the business’s Ebitda of €115m.
4HEûROOlNGûUNITûISûPARTûOFû)MERYSû
ceramic materials business, which saw
declining earnings last year due to lower
housing renovation activity.
Lone Star previously bought German
building materials business Xella for
€2.2bn in late 2016, subsequently buying
Spanish peer Ursa last summer.
%XPECTEDûCORPORATEûANDûISSUERûRATINGSû
are B1/B3.

BIOGROUP SEEKS €137m ADD-ON

French laboratory services company BIOGROUP

LCD has launched a €137.3m term loan B

add-on, backing the group’s acquisitions.

The loan is guided at 350bp over Euribor

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û/)$

Some €42.6m of the incremental facility

will have a delayed draw.

JP Morgan is lead-left, with Natixis joining

as bookrunners and agent.

Biogroup LCD is the third-largest player

in routine lab testing, and is majority

owned by founder Stephane Eimer.

It was last in the leveraged loan market

a year ago for a €179m term loan B add-on.

M GROUP SEEKS £400m LOANS

Infrastructure company M GROUP SERVICES

has launched a £400m leveraged loan to

support the acquisition by private equity

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The loan comprises a £75m 6.5-year

revolving credit facility and a £325m

seven-year term loan B.

The TLB includes a 101 soft call

PROTECTIONûFORûSIXûMONTHS

Pricing on a US$1.75bn buyout deal for blood
glucose monitoring systems marketer LIFESCAN
widened during syndication to 600bp over Libor
from 450bp over Libor on a US$1.475bn first-lien
tranche and pricing on a US$350m second-lien
tranche increased to 950bp over Libor from
850bp.
The issuer also cut the maturity of the first-
lien loan to six years from seven years and the
second-lien loan to seven years from eight years.
Investors were worried that the company receives
85% of its revenue from glucose test strips.
Familiar credits with a good market track
record are receiving a good response from
investors. Battery maker ENERGIZER HOLDINGS
was able to cut pricing during syndication on a
US$1bn term loan supporting its acquisition of
Spectrum Brands’ batteries and lights unit to
225bp over Libor from 250bp in June.
A US$350m add-on for waste services
provider CLEAN HARBOR was well received due
to the company’s solid track record and strong
financials despite a low coupon of 175bp over
Libor, which has proved difficult for less well liked
companies.
Investors were last able to call the shots in
late 2015 and early 2016 when falling oil and
commodities prices raised fears over China’s
economy and created a huge downdraft that led

to multiple hung deals, including a US$5.6bn

financing that backed the buyout of software

provider VERITAS.

It is hard to compare current market conditions

to that period, the investor said, adding that

current market conditions are more technical as

the raft of recent supply has outstripped demand.

“Clearly we’re going to get hit eventually, but

this is more technical. Nobody’s really worried

about defaults right now, the economy’s in

good standing and our portfolio companies are

performing well.”

The deteriorating quality of deals is also giving

investors ammunition to push back against more

highly leveraged loans after regulators, including

Comptroller of the Currency Joseph Otting,

encouraged underwriters to push the limits.

Otting said in February that banks have the

ability to underwrite deals outside of the leverage

lending guidelines put in place to curb risky

lending in 2013 as long as they have the capital

to do and reiterated the statement in May.

“I think underwriters in their desire to be

competitive to win business are pushing capital

structures a lot harder,” the banker said.

COMING SOON

Wider primary pricing means that the large

buyout deals backing Blackstone’s purchase of

Thomson Reuters’ F&R unit and Envision

may need to price higher than originally

envisaged to clear the market. Both deals

are expected to launch formally after

Labor Day.

The financing for F&R is viewed as an

attractive deal due to its business line and

strong financials and could price under 400bp

as a result, the banker and investors said. The

US$8bn Term Loan B and US$5.5bn bond

bridge loan are being shown to large investors.

“If it ends up at 400bp, I would think what is

being reflected in that price is a size premium,”

the banker said, pointing out that the US$8bn

term loan will require virtually everyone to

participate, which could potentially give

investors bargaining power.

Blackstone announced on January 30 that it

was buying a 55% majority stake in Thomson

Reuters’ F&R unit, which includes IFR.

Envision’s US$9.9bn buyout by private equity

firm KKR & Co is also expected to generate

wide interest but the company’s credit profile

is expected to weaken with additional leverage.

Both Moody’s and S&P put the company on

review for downgrade and said the company’s

leverage will increase from around 4.5 times

prior to the buyout.

Jonathan Schwarzberg

EUROPEAN LEVERAGED LOANS

BOOKRUNNERS: 1/1/2018–30/6/2018

Managing No of Total Share

bank or group issues US$(m) (%)

1 BNP Paribas 39 8,282.80 9.1

2 Credit Agricole 36 6,832.25 7.5

3 Deutsche Bank 28 6,312.36 6.9

4 HSBC 25 5,184.62 5.7

5 SG 25 4,908.01 5.4

6 Citigroup 16 4,838.62 5.3

7 Goldman Sachs 20 4,759.51 5.2

8 JP Morgan 19 4,618.14 5.1

9 Barclays 18 3,772.01 4.1

10 Natixis 19 3,559.10 3.9

Total 102 90,994.23

Excluding project finance. Western Europe only included.

Source: Thomson Reuters SDC code: P10

EMEA SPONSORED LOAN BOOKRUNNERS

BOOKRUNNERS: 1/1/2018–30/6/2018

Europe, Middle East, Africa

Managing No of Total Share

bank or group issues US$(m) (%)

1 BNP Paribas 23 4,453.49 9.6

2 Deutsche Bank 17 4,004.92 8.6

3 HSBC 15 3,166.20 6.8

4 JP Morgan 12 2,927.22 6.3

5 Credit Agricole 22 2,760.31 6.0

6 Goldman Sachs 15 2,657.34 5.7

7 SG 15 2,597.02 5.6

8 Natixis 14 2,166.33 4.7

9 Citigroup 6 2,048.17 4.4

10 Barclays 10 2,041.99 4.4

Total 62 46,347.07

Excluding project finance.

Source: Thomson Reuters SDC code: P13