Circor up on buyout; Constant Contact slides; HUB, Avolon, Samsonite, ArcLight set talk

By Sara Rosenberg

New York, June 5 – Circor International Inc.’s term loan headed higher in the secondary market on Monday in reaction to news that the company is being purchased by KKR, and Constant Contact Inc.’s first-lien term loan softened following a ratings downgrade by S&P Global Ratings.

Meanwhile, in the primary market, HUB International, Avolon, Samsonite International SA and ArcLight NGPL Holdings LLC (AL NGPL Holdings LLC) released price talk on their term loan transactions in connection with lender calls.

Circor gains

Circor International’s term loan moved up to par bid, par ½ offered on Monday from 99 bid, 99¾ offered on Friday as the company announced that it is being bought by KKR for $49 per share in cash, according to a market source.

The transaction is valued at about $1.6 billion, including the assumption of debt.

To fund the buyout, the company has received commitments for new debt financing and for equity.

Closing is expected in the fourth quarter, subject to shareholder approval, regulatory approvals and other customary conditions.

Circor is a Burlington, Mass.-based provider of mission critical flow control products and services for the industrial and aerospace & defense markets.

Constant Contact dips

Constant Contact’s first-lien term loan fell to 92 bid, 93 offered on Monday from 93 bid, 94 offered on Friday after S&P cut the company’s issuer credit and first-lien debt ratings to B- from B, and second-lien debt rating to CCC from CCC+, a trader remarked. The ratings outlook is stable.

The downgrades were prompted by S&P’s belief that Constant Contact’s ability to generate meaningful free cash flow will be limited as the company will continue to face higher interest on its floating-rate debt through 2024 and a heightened risk of a recession could threaten small- and medium-sized businesses.

The stable outlook reflects S&P’s expectation that the company’s free operating cash flow will remain positive in 2023 despite higher interest rates and macroeconomic challenges.

Constant Contact is a Waltham, Mass.-based digital marketing company.

HUB comes to market

Moving to the primary market, HUB International held a lender call at 11:30 a.m. ET on Monday to launch a $4.25 billion seven-year term loan B (B2/B) talked at SOFR plus 425 basis points with a 25 bps step-down upon an initial public offering, a 0.75% floor, an original issue discount of 98 to 98.5 and 101 soft call protection for six months, according to a market source.

Goldman Sachs Bank USA, Morgan Stanley Senior Funding Inc., Barclays, JPMorgan Chase Bank, BofA Securities Inc., BMO Capital Markets, Nomura, Macquarie Capital (USA) Inc., Credit Suisse Securities (USA) LLC and ATB are leading the deal. Morgan Stanley is the administrative agent.

The term loan will be used with $2.675 billion of other secured debt to refinance existing term loans due 2025 and fund current and future acquisitions under letters of intent.

Commitments and signature pages for cashless rolls are due at 10 a.m. ET on Thursday, the source added.

Hellman & Friedman is the sponsor.

HUB is a Chicago-based insurance brokerage firm.

Avolon holds call

Avolon emerged in the morning with plans to hold a lender call at 11 a.m. ET to launch a $1,431,768,173.13 senior secured covenant-lite first-lien term loan B-6 due June 2028 talked at SOFR plus 250 bps with a 0.5% floor, an original issue discount of 99 and 101 soft call protection for six months, a market source said.

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

Morgan Stanley Senior Funding Inc. is the left lead on the deal, which will be used to amend and extend an existing $1,431,768,173.13 term loan B-3 due January 2025 that is priced at Libor plus 175 bps.

Avolon is a Dublin-based aircraft lessor.

Samsonite refinancing

Samsonite held a lender call at 11 a.m. ET, launching a $600 million seven-year term loan B at talk of SOFR plus 275 bps with a 0.5% floor, an original issue discount of 98.5 to 99 and 101 soft call protection for six months, according to market sources.

Commitments are due at 5 p.m. ET on June 12, sources said.

JPMorgan Chase Bank is the left lead on the term loan B.

In addition to the term loan B, the company is getting an $800 million term loan A priced at SOFR plus 137.5 bps and an $850 million revolving credit facility, for which HSBC Securities (USA) Inc. is the left lead.

Syndication of the term loan A and revolver has already been completed, sources added.

The new credit facilities (/BB+/BBB-) will be used with cash on hand to refinance the company’s existing senior secured credit facilities.

Samsonite is a Hong Kong-based manufacturer of bags and luggage.

ArcLight NGPL launches

ArcLight NGPL hosted a lender call at 2 p.m. ET to launch a non-fungible $235 million senior secured term loan due April 15, 2028 talked at SOFR+CSA plus 375 bps with a 1% floor, an original issue discount of 97.5 to 98 and 101 soft call protection for six months, 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 June 13, the source added.

Barclays is the left lead on the deal that will be used to support the acquisition by an affiliate of ArcLight Capital Partners of an additional 12.5% stake in NGPL Holdings LLC, which indirectly owns 100% of Natural Gas Pipeline Co. of America LLC, to fund the purchase of a 12.5% share of the shareholders notes, and to pay related fees and expenses.

NGPL is a FERC-regulated natural gas pipeline system.

Fund flows

In other news, actively managed loan fund flows on Friday were negative $52 million and loan ETFs were positive $131 million, market sources said.

Year-to-date outflows for loan funds total $17.7 billion, sources added.

Loan indices rise

IHS Markit’s iBoxx loan indices were stronger on Friday, with the Leveraged Loan indexes (MiLLi) closing out the day up 0.18% and the Liquid Leveraged Loan indices (LLLi) closing out the day up 0.26%.

Month to date, the MiLLi is up 0.15% and year to date it is up 4.06%, and the LLLi is up 0.21% month to date and up 4.06% year to date.

Average secondary market bids in the United States on Friday were 90.98, up 0.07% from the previous day and down 0.98% year to date.

According to the IHS Markit data, some of the top advancers on Friday were Cineworld’s September 2019 incremental RSA/backstop with rights covenant-lite term loan at 24.75, up from 21.82, AMC Entertainment’s April 2019 covenant-lite term loan B at 80.42, up from 78.75, and Wheel Pros’ May 2021 covenant-lite term loan at 61.88, up from 60.69.

Some top decliners on Friday were EyeCare Partners’ February 2020 covenant-lite term loan B at 71.33, down from 74.56, Byju’s November 2021 covenant-lite term loan B at 63.5, down from 65.4, and Shutterfly’s July 2021 covenant-lite term loan at 56, down from 57.63.

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