Momentive Performance sets term loan changes, frees to trade; Melissa & Doug comes to market

By Sara Rosenberg

New York, March 23 – Momentive Performance Materials Inc. lifted pricing on its term loan B, widened the original issue discount, sweetened the call protection and made various changes to documentation before breaking for trading on Thursday.

In more happenings, Melissa & Doug (MND Holdings III Corp.) approached lenders with a new first-lien term loan to extend the maturity of its existing term loan.

Momentive revised, breaks

Momentive Performance Materials raised the spread on its $850 million five-year term loan B (Ba3/B+) to SOFR plus 450 basis points from SOFR plus 400 bps, moved the original issue discount to 96 from talk in the range of 97.5 to 98 and extended the 101 soft call protection to one year from six months, a market source remarked.

Also, modifications were made to documentation, including changing MFN to 50 bps for life instead of for 12 months, placing a 25% cap on EBITDA add-backs, and revising excess cash flow sweep step-downs, asset sale sweeps and available amount usage.

As before, the term loan has a 0% floor.

Recommitments were due at 3 p.m. ET on Thursday and the term loan B made its way into the secondary market later in the day, with levels quoted at 96˝ bid, 97˝ offered, another source added.

JPMorgan Chase Bank, BNP Paribas Securities Corp., BofA Securities Inc., Citigroup Global Markets Inc., Truist and Deutsche Bank Securities Inc. are leading the deal that will be used to refinance existing $724 million and €75 million senior secured first-lien term loan Bs due May 2024, for general corporate purposes, and to pay associated transaction fees and expenses.

Momentive is a Niskayuna, N.Y.-based silicones and advanced materials company.

Melissa holds call

Melissa & Doug emerged in the morning with plans to hold a lender call at 1 p.m. ET on Thursday to launch a $260 million first-lien term loan due June 2026 talked at SOFR+15 bps CSA plus 550 bps with a 1% floor, an original issue discount of 95 and 101 soft call protection for six months, according to a market source.

The company’s $325 million of credit facilities also include a $65 million revolver.

Commitments are due at noon ET on March 31, the source added.

Credit Suisse Securities (USA) LLC is the left lead arranger on the deal.

The term loan will be used to extend an existing term loan due June 2024 that is priced at SOFR+15 bps CSA plus 350 bps with a 1% floor.

Melissa & Doug is a Wilton, Conn.-based specialty toy brand with an educational focus.

Fund flows

In other news, actively managed loan fund flows on Wednesday were negative $210 million and loan ETFs were positive $56 million, market sources said.

Actively managed high-yield fund flows on Wednesday were positive $185 million and high-yield ETFs were negative $82 million, sources added.

Loan indices rise

IHS Markit’s iBoxx loan indices were higher on Wednesday, with the Leveraged Loan indexes (MiLLi) closing out the day up 0.06% and the Liquid Leveraged Loan indices (LLLi) closing out the day up 0.17%.

Month to date, the MiLLi is down 1.01% and year to date it is up 2.16%, and the LLLi is down 0.97% month to date and up 1.93% year to date.

Average secondary market bids in the U.S. on Wednesday were 91.1, up 0.01% from the previous day and down 0.85% year to date.

According to the IHS Markit data, some of the top advancers on Wednesday were Associated Asphalt’s April 2017 term loan B at 79, up from 75.98, US LBM’s December 2020 covenant-lite term loan B at 92.81, up from 89.38, and Aspect Software’s May 2021 term loan at 76.85, up from 75.2.

Some top decliners on Wednesday were Promontory Interfinancial’s October 2019 covenant-lite term loan B at 87.5, down from 93.11, Avison Young’s January 2019 covenant-lite term loan at 73.19, down from 77.63, and Rackspace Hosting’s February 2021 covenant-lite term loan B at 54.54, down from 56.75.

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