Covetrus, Citrix Systems deal revisions surface; Brightspeed, Warner Music disclose talk

By Sara Rosenberg

New York, Sept. 19 – In the primary market on Monday, Covetrus Inc. (Corgi BidCo Inc.) placed the spread on its term loan at the wide end of talk, revised original issue discount guidance, extended the call protection and made a number of changes to documentation.

Additionally, Citrix Systems Inc. (Tibco Software Inc.) removed pricing step-downs from its term loan B, sweetened the call protection and reworked documentation items.

Furthermore, Brightspeed (Connect Holding II LLC) released price talk on its term loan B in connection with its lender call and Warner Music Group (WMG Acquisition Corp.) came to market with an incremental term loan.

Covetrus tweaks deal

Covetrus set pricing on its $1.525 billion seven-year covenant-lite first-lien term loan (B1/B-) at SOFR plus 500 basis points, the high end of the SOFR plus 475 bps to 500 bps talk, moved original issue discount talk to a range of 94 to 95 from a range of 95 to 96 and extended the 101 soft call protection to one year from six months, a market source said.

The term loan still has a 0.5% floor.

There were also a number of modifications to documentation, including to MFN, accordion, pari passu debt, business line exception, asset sale, excess cash flow sweep, other ratio debt, general restricted payment basket, unlimited investments, EBITDA cost savings and synergies, minimum consolidated coverage ratio for acquisitions and investments, ratio liens basket, available amount and post-IPO restricted payment basket, the source continued. Also, the restricted payment debt basket and the investments in joint ventures basket were removed, J. Crew and Chewy provisions were added and quarterly lender calls were added.

Recommitments are due at 5 p.m. ET on Tuesday.

Covetrus being acquired

Covetrus’ first-lien term loan will be used with a $350 million privately placed second-lien term loan and equity to 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.

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 leading the term loan.

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

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

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

Citrix modified

Citrix Systems eliminated from its $4.05 billion 6.5-year term loan B and $500 million equivalent euro 6.5-year term loan B leverage-based pricing step-downs an extended the 101 soft call protection to one year from six months, according to a market source.

Also, MFN was changed to 50 bps with an 18-month sunset from 75 bps with a six-month sunset and certain carve-outs were removed, incremental was reduced to $1.525 billion with a 0.75x grower from $2.025 billion with a 1x grower and “no worse” prongs were removed, the inside maturity basket was removed and permitted alternative security debt was eliminated, the source said.

In addition, asset-sale step-downs were removed, the reinvestment period for asset sales was changed to 18 months from 24 months with a six-month extension, and changes were made to the excess cash flow sweep, debt incurrence, restricted payments, permitted investments, available amount, EBITDA and permitted liens.

And, Chewy and Serta protections were added to the credit agreement.

Citrix talk

Citrix’s U.S. term loan continues to be talked at SOFR+10 bps CSA plus 450 bps with a 0.5% floor and an original issue discount of 92.

Commitments remained due at 5 p.m. ET on Monday, the source added.

The company is also getting a $1 billion five-year revolver and a $2.5 billion six-year term loan A.

Previously, the term loan A was downsized from a revised amount of $3 billion and an initial size of $3.5 billion as the company’s 6.5-year first-lien secured notes offering was increased to $4 billion from a revised amount of $3.5 billion and an initial size of $3 billion.

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 roughly $6.5 billion of equity to fund the buyout of the company by Vista Equity Partners and Evergreen Coast Capital Corp. for $104.00 in cash per share 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 lead banks

BofA Securities Inc., Credit Suisse Securities (USA) LLC, Goldman Sachs Bank USA, Barclays, Citigroup Global Markets Inc., Deutsche Bank Securities Inc., KKR Capital Markets LLC, Mizuho Bank, Morgan Stanley Senior Funding Inc., RBC Capital Markets, Apollo Global Funding, Jefferies LLC, HSBC Securities (USA) Inc., Macquarie Capital (USA) Inc., Nomura Securities International Inc., Truist Securities Inc., UBS Securities LLC, Wells Fargo Securities LLC, Fifth Third Bank, ING Capital LLC, Intesa Sanpaolo, KeyBanc Capital Markets Inc., MUFG, Natixis, Santander Bank, The Bank of Nova Scotia, Silicon Valley Bank, Societe Generale, Stifel Nicolaus and Co., SPC Capital Markets LLC, TD Securities (USA) LLC and U.S. Bank are the joint lead arrangers and bookrunners on Citrix’s term loan debt.

Closing is expected during the last week of September, subject to customary conditions.

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.

Brightspeed proposed terms

Brightspeed held its lender call on Monday morning and announced talk on its $2 billion seven-year term loan B at SOFR+10 bps CSA plus 500 bps with a 0.5% floor and an original issue discount of 92, a market source remarked.

The term loan B has 101 soft call protection for six months.

Commitments are due at 5 p.m. ET on Sept. 29, the source added.

BofA Securities Inc., Barclays, Goldman Sachs Bank USA, Mizuho, BNP Paribas Securities Corp., MUFG, Deutsche Bank Securities Inc., Credit Suisse Securities (USA) LLC, BMO Capital Markets Corp., Citigroup Global Markets Inc., Morgan Stanley Senior Funding Inc. and RBC Capital Markets are leading the deal.

Brightspeed pro rata

In addition to the term loan B, Brightspeed’s $3.6 billion of credit facilities (B2/B-) include a $600 million revolver and a $1 billion term loan A.

Proceeds will be used with $1.865 billion of senior secured notes to help fund the acquisition of Lumen Technologies’ incumbent local exchange carrier business in 20 states by Apollo Global Management Inc. for $7.5 billion, with the acquired business being named Brightspeed.

Closing is expected early in the fourth quarter, subject to customary conditions.

Brightspeed is a Charlotte, N.C.-based provider of broadband and telecommunications services.

Warner launches

Warner Music launched in the morning without a lender call a non-fungible $150 million incremental first-lien term loan (Ba3/BB+) due Jan. 20, 2028 talked at SOFR plus 300 bps to 325 bps with a 0.5% floor, an original issue discount of 97 and 101 soft call protection for six months, according to a market source.

Commitments are due at noon ET on Tuesday, the source said.

Credit Suisse Securities (USA) LLC is the left lead on the deal that will be used to fund deferred consideration owed in connection with a 2021 acquisition and for general corporate purposes.

The company’s existing term loan was quoted at 97 bid, 98 offered, post the incremental term loan news, unchanged from Friday’s levels, another source added.

Warner Music is a New York-based music entertainment company.

Fund flows

In other news, Friday’s actively managed loan fund flows were negative $162 million and Loan ETFs were negative $199 million, sources said.

Inflows for loan funds year to date total plus-$5 billion, sources added.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.