Citrix Systems scales back term loan A amount; Covetrus syndication effort tracking well

By Sara Rosenberg

New York, Sept. 12 – In the primary market on Monday, Citrix Systems Inc. (Tibco Software Inc.) decreased the size of its term loan A in favor of a larger secured notes offering.

Also, talk in the market is that the Covetrus Inc. (Corgi BidCo Inc.) first-lien term loan has been seeing good demand ahead of its commitment deadline next week.

Citrix trims A loan

Citrix Systems reduced its six-year term loan A to $2.5 billion from a most recent amount of $3 billion and an initial size of $3.5 billion, and raised its 6.5-year first-lien secured notes offering to $4 billion from a most recent size of $3.5 billion and an initial amount of $3 billion, a market source remarked.

As reported earlier, the company is also getting a $4.05 billion 6.5-year term loan B that launched with a call last week at talk of SOFR+10 basis points CSA plus 450 bps with a 0.5% floor, an original issue discount of 92 and 101 soft call protection for six months.

Commitments for the U.S. term loan B are due at 5 p.m. ET on Sept. 19.

Market sources have heard that the U.S. term loan B is fully subscribed and was pretty much circled before the actual lender call took place.

In addition, the company is getting a $500 million equivalent euro 6.5-year term loan B and a $1 billion five-year revolver.

Citrix lead banks

BofA Securities Inc., Credit Suisse Securities (USA) LLC and Goldman Sachs Bank USA are joint lead arrangers with additional banks on Citrix’s term loan debt. Barclays, Citigroup Global Markets Inc., Deutsche Bank Securities Inc., KKR Capital Markets LLC, Mizuho Bank, Morgan Stanley Senior Funding Inc. and RBC Capital Markets were all part of the original debt commitment group.

The term loans and bonds will be used with $3.95 billion of seven-year second-lien secured debt, $2.5 billion of preferred equity and $6.511 billion of equity to fund the buyout of the company by Vista Equity Partners and Evergreen Coast Capital Corp. and merger with Tibco Software Inc., one of Vista’s portfolio companies, repay existing debt at Citrix and Tibco and add cash to the balance sheet.

Citrix is being bought for $104.00 in cash per share. The transaction is valued at $16.5 billion, including the assumption of debt.

Net first-lien debt is 5.1x and net total debt is 7x.

Closing is expected during the last week of September, subject to customary conditions. All regulatory approvals for the transaction have been received.

Citrix is a Fort Lauderdale, Fla.-based provider of secure, unified digital workspace technology. Tibco is a Palo Alto, Calif.-based infrastructure and business intelligence software company.

Covetrus attracts demand

Covetrus’ $1.525 billion seven-year covenant-lite first-lien term loan (B1/B-) is heard to be in good shape ahead of its commitment deadline scheduled for 3 p.m. ET on Sept. 19, according to a market source.

Talk on the term loan is SOFR plus 475 basis points to 500 bps with a 0.5% floor, an original issue discount of 95 to 96 and 101 soft call protection for six months.

Deutsche Bank Securities Inc., UBS Investment Bank, BMO Capital Markets, Mizuho Securities USA LLC, TD Securities (USA) LLC, Santander Bank and ING Capital LLC are the bookrunners on the deal, with Deutsche the left lead and administrative agent.

The company is also getting a $350 million privately placed second-lien term loan.

Based on the commitment letter, the company is expected to get a $300 million five-year revolving credit facility as well.

Covetrus being acquired

Covetrus will use the new debt financing to help fund its buyout by Clayton, Dubilier & Rice and TPG Capital for $21.00 per share in cash, representing an enterprise value of about $4 billion.

Clayton, Dubilier & Rice currently owns around 24% of the company’s outstanding shares of common stock.

Other funds for the transaction will come from equity.

Closing is expected this year, subject to regulatory approvals, Covetrus shareholder approval and other customary conditions.

Covetrus is a Portland, Me.-based animal-health technology and services company.

Loan fund flows

In other news, Friday’s actively managed loan fund flows were negative $170 million and Loan ETFs were positive $38 million, sources said.

Over the past three weeks, loan outflows totaled $2.8 billion. Year to date loan inflows totaled $5.9 billion.

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