Must-know: Acquisition and LBO-related financing
Must-know: High-yield bonds in the week ending October 10 (Part 7 of 8)
Deals for leveraged loans in the week ending October 10
The $2 billion add-on Cov-lite Term Loan B from Level 3 Communications (LVLT) occurred during the week. The loan is a new tranche under LVLT’s existing senior secured credit facility. It has a term of 7.5 years. The coupon on the Ba3 or BB rated $2 billion facility was set at LIBOR + 350 basis points. The LIBOR floor was set at 1%.
LVLT plans to use the proceeds to finance the cash component of its purchase price for acquiring TW Telecom.
LBO-related issuance
In other major deals in the week, British software firm Micro Focus issued $2 billion in B1 or BB- rated senior secured loans in three tranches:
A $225 million five-year Revolving Credit Facility
A $500 million five-year Cov-lite Term Loan C, issued at LIBOR + 375 bps with a LIBOR floor set at 0.75%
A $1,275 million seven-year Cov-lite Term Loan B, issued at LIBOR + 425 bps with a LIBOR floor set at 1.00%
The company plans to use the proceeds to finance its leveraged buyout (or LBO) of Houston-based Attachment Group Inc.
Refinancing deals
There were two refinancing transactions in the week. There was one transaction by Metaldyne Performance Group at $1.6 billion. The second transaction was by Toys “R” Us at ~$1.3 billion.
Other major deals included loans (BKLN) undertaken by American Airlines (AAL). AAL had ~$1.1 billion in loans for general corporate purposes. Albertson’s Holdings had loans for $300 million. Albertson’s plans to use the proceeds to partially fund its proposed acquisition of Safeway (SWY). SWY is part of the S&P 500 Index (SPY).
In the next part of the series, we’ll analyze secondary market trends in leveraged loans.
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