Veracode frees to trade; Penn National changes emerge; First Brands, Denali Water set talk

By Sara Rosenberg

New York, April 20 – Veracode (Mitnick Corporate Purchaser Inc.) increased the size of its first-lien term loan, lifted pricing, set the original issue discount at the tight end of revised guidance and extended the call protection, and terminated plans for a second-lien term loan, before breaking for trading on Wednesday.

In more happenings, Penn National Gaming Inc. trimmed the spread on its term loan B and tightened the original issue discount.

Also, First Brands Group LLC approached lenders with an incremental first-lien term loan, Denali Water Solutions LLC released price talk on its incremental term loan with launch and Bausch + Lomb joined this week’s primary calendar.

Veracode reworked

Veracode raised its seven-year first-lien term loan (B3/B-/B+) to $815 million from $580 million as plans were canceled for a $235 million privately placed second-lien term loan, raised pricing to SOFR plus 475 basis points from revised talk of SOFR plus 400 bps and initial talk in the range of 400 bps to 425 bps, finalized the original issue discount at 99.5, the tight end of revised talk of 99 to 99.5 and tighter than initial talk of 98.5, and extended the 101 soft call protection to one year from six months, according to a market source.

Additionally, the incremental first-lien net leverage ratio was changed to unlimited subject to 7.75x first-lien net leverage from unlimited subject to 5.5x first-lien net leverage, the company added a total cap on superpriority debt at the greater of $125 million and 100% EBITDA, and quarterly lender calls were added, the source continued.

As before, the term loan has one 25 bps step-down at 0.75x inside closing first-lien net leverage, a 0.5% floor and CSA of 10 bps.

Previously in syndication, a 25 bps step-down at 0.5x inside closing first-lien net leverage was removed from the term loan.

Veracode hits secondary

Commitments for Veracode’s first-lien term loan were due at 1 p.m. ET on Wednesday and the debt freed to trade in the afternoon, with levels quoted at 99¾ bid, par ¼ offered, another source added.

Deutsche Bank Securities Inc., BMO Capital Markets, Golub, Owl Rock and TD Securities (USA) LLC are leading the deal that will be used to help fund the buyout of the company by TA Associates in a transaction that values Veracode at $2.5 billion. Veracode’s current majority investor, Thoma Bravo, will retain a minority position in the business.

Closing is expected this quarter, subject to customary conditions.

Veracode is a Burlington, Mass.-based provider of application security solutions.

Penn National revised

In other news, Penn National Gaming lowered pricing on its $1 billion seven-year term loan B (Ba3/BB) to SOFR+10 bps CSA plus 275 bps from talk in the range of 300 bps to 325 bps, and adjusted the original issue discount to 99.5 from talk in the range of 98.5 to 99, a market source said.

The term loan still has a 0.5% floor and 101 soft call protection for six months.

Recommitments were due at 5 p.m. ET on Wednesday, the source added.

BofA Securities Inc. is leading the deal that will be used to help refinance existing loans.

Penn National is a Wyomissing, Pa.-based owner and operator of gaming and racing facilities.

First Brands launches

First Brands Group launched without a call on Wednesday morning a fungible $300 million incremental senior secured first-lien term loan due March 30, 2027 talked at SOFR+CSA plus 500 bps with a 1% floor and an original issue discount of 99.25, a market source remarked.

CSA is 11.448 bps one-month rate, 26.161 bps three-month rate and 42.826 bps six-month rate.

Commitments are due at noon ET on April 26, the source added.

Jefferies LLC, BofA Securities Inc., Wells Fargo Securities LLC, Regions Bank, Capital One and Fifth Third are leading the deal that will be used to add cash to the balance sheet for general corporate purposes.

With this transaction, the existing loans will convert through a negative consent process to SOFR from Libor with CSA of 11.448 bps one-month rate, 26.161 bps three-month rate and 42.826 bps six-month rate.

Pro forma for the transaction, the first-lien term loan will total $2.017 billion.

First Brands is an automotive aftermarket platform offering comprehensive solutions for consumable maintenance and mission-critical repair parts.

Denali guidance

Denali Water Solutions held its call in the afternoon, launching its $185 million incremental term loan at talk of SOFR+CSA plus 450 bps with a 0.75% floor, an original issue discount of 96 to 96.5 and 101 soft call protection for six months, a market source said.

CSA is 10 bps one-month rate, 15 bps three-month rate and 25 bps six-month rate.

Commitments are due at 5 p.m. ET on May 4, the source added.

UBS Investment Bank is leading the deal that will be used to fund the acquisition of Imperial Western Products, a Coachella, Calif.-based company involved in procurement, processing, services, manufacturing, transporting, warehousing, distribution and merchandising.

Denali Water Solutions is a Russellville, Ark.-based specialty waste and environmental services company.

Bausch readies deal

Bausch + Lomb set a lender call for 11 a.m. ET on Thursday to launch a $2.5 billion first-lien term loan (Ba2/B+), according to a market source.

Goldman Sachs Bank USA, Morgan Stanley Senior Funding Inc., Citigroup Global Markets Inc., JPMorgan Chase Bank and Barclays are leading the deal.

The term loan is being done in connection with the company’s spin-off from Bausch Health Cos. Inc. and will be used to fund an intercompany loan repayment to Bausch Health.

Bausch + Lomb is a Vaughan, Ont.-based eye health company.

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