Gulf Finance strengthens again with paydown hopes; Cyxtera retreats post-downgrade

By Sara Rosenberg

New York, Dec. 21 – Gulf Finance LLC’s term loan B continued to rise in the secondary market on Wednesday as the company held a lender call to update lenders on its proposed amendment and asset sale, which is expected to lead to a partial repayment of the debt.

Also, Cyxtera Technologies Inc.’s first-lien term loan weakened in trading following news of a two-notch downgrade to the debt by S&P Global Ratings.

Gulf Finance higher

Gulf Finance’s senior secured term loan B had another day of gains as a result of a potential repayment of some of the debt, according to traders.

One trader had the term loan B quoted at 94½ bid, 96½ offered on Wednesday, up from 89½ bid, 91½ offered on Tuesday, and a second trader had the term loan B quoted at 94½ bid, 96½ offered, up from 90 bid, 92 offered. On Monday, the term loan B was quoted at 85 bid, 87 offered.

As previously reported, the company is seeking an amendment to allow for an asset sale and some of the proceeds from that sale would be used to repay a portion of the outstanding term loan B.

On Monday, Global Partners LP revealed in an 8-K filed with the Securities and Exchange Commission that it has entered into an agreement to purchase all of the outstanding equity interests of New Haven NewCo, Woodbury NewCo, Portland NewCo, Linden NewCo and Chelsea NewCo from Gulf Oil Ltd. Partnership for $273 million in cash, subject to certain customary adjustments. The five terminals have an aggregate storage capacity of about 3.9 million barrels.

Gulf amendment timing

Gulf Finance told lenders that signatures for its credit agreement amendment are due next week, another source added.

Closing on the Global Partners transaction is expected in the first half of 2023, subject to customary conditions, including approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, closing of the pre-closing reorganization and delivery of specified deliverables.

Gulf Finance is a refined products terminaling, storage and logistics business and a distributor of petroleum products.

Cyxtera softens

Cyxtera Technologies’ first-lien term loan fell to 84 bid, 87 offered in the afternoon from 86¾ bid, 88¾ offered in the morning and end of day yesterday after the debt was downgraded by S&P to CCC+ from B and the company’s issuer credit rating was cut to CCC from B-, a market source remarked. The outlook is negative.

S&P said in the rating release that Cyxtera has not yet refinanced its $120 million revolver due Nov. 1, 2023 and, since the revolver is a key source of the company’s liquidity, there is increased risk of a debt restructuring or default over the next 12 months.

According to S&P, Cyxtera had about $42 million drawn on the revolver as of Sept. 30, 2022 and is expected to need to further borrow on the revolver over the next year to fund significant cash deficits associated with capital spending initiatives.

Absent a revolver extension, S&P believes the company will likely deplete its liquidity sources and be forced to seek alternative financing solutions to meet its financial obligations.

The rating release also said that it is unclear whether the company will be able to successfully refinance and extend the maturity profile of its debt given challenging capital market conditions and elevated financial leverage.

Cyxtera is a Coral Gables, Fla.-based colocation and data center provider.

Fund flows

In other news, actively managed loan fund flows on Tuesday were negative $289 million and loan ETFs were negative $35 million, market sources said.

Outflows in loan funds week to date total an estimated $1.13 million, following outflows in the prior week of $1.18 billion, sources added.

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