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Alessandro Albano

Owen Sanderson

No globally systemic banks appear to have fallen over this week, unlike one year ago, but we had the next best thing for European leveraged finance, as the management and owner of the largest capital structure in the market started a game of chicken over nearly €25bn of debt.

We refer, of course, to Altice France (SFR), whose fourth quarter earnings call crashed bonds and loans across the structure, incinerating a ton of value for levfin investors. The long-dated SUNs were worst hit, down more than 30 points, but it’s been a massive sell-off everywhere (here’s a quick look at the initial impacts on Wednesday).

What makes this move particularly stunning is that it must have been deliberate. Altice’s investor relations team are some of the best in the business; you don’t raise a €60bn debt complex without learning a thing or two about creditor relations.

As 9fin’s Nathan Mitchell and Yusuf Sule wrote:

“From a cynical point of view, management’s staunch position opens the door to the exact thing they’re asking for: discounted buybacks.

The game theory is rife. If management announces its willingness to do buybacks, the debt trades upwards and the deleveraging impact is less. On the other hand, and the one potentially at play, they take a tough stance, the debt trades down and the asset sale proceeds have more power — ultimately meaning there is less of a need for more asset sales and potentially providing more equity value down the line.”

Their piece goes deep on the asset sales and proceeds issue at the centre of the dispute, and looks at the company’s earnings capacity elsewhere.

But at the core here is a real test of the loose documentation which has characterised leveraged finance for a decade; by coincidence, we’re almost exactly 10 years out from the syndication of the original Numericable-SFR LBO debt.

What happens when these loose docs run into an owner who’s determined to keep control of the business? Creditors are looking to hire advisors, so it could prove a legal battle for the ages.

“Before Altice’s call I had nightmares on Intrum, now it’s both,” a high yield bond trader told 9fin.

As of Wednesday evening, the nightmares weren’t yet over. Thursday saw another blow for one of the banner credits in European leveraged finance, as packaging firm Ardagh appointed advisors. The bond sell-off was less brutal than in Altice, but we’re still talking six points on the unsecured notes from the already distressed levels in the 60s, and some read-across to Ardagh Metal Packaging (AMP)

Here’s some 9fin analysis on the group’s refinancing prospects and earnings, and a further writeup of commentssuggesting that the April 2025s would not be allowed to go current. The basic problem, though, is tricky to fix — too much debt and not enough company.

It’s compounded by the baroque group structure, with three separate companies with their own restricted debt groups (Ardagh, AMP and Trivium) involved, and, like Altice, a shareholder with a track record of getting creditors dancing to his tune. 9fin’s legal team have sorted through the structure, see here for their take on the company’s options.

Neither situation looks like a great advert for the joys of credit investing, but the primary market is powering on undeterred, with active new issue markets across both loans and bonds.

On the loan side, the market is still open for the cuspier more controversial B3 names, where it takes a little more work (and a little more margin) to get lenders comfortable. The spread-tightening euphoria seen earlier in 2024 has started to ebb away, as a busy primary pipeline and the prospect of a reenergised LBO market has eased the imbalance between supply and demand.

This dynamic has rebalanced the market in favour of lenders, with decent credit dispersion seeing more challenging transactions approach the market at 500bps.

“It’s still a good window for portfolio companies to come to market, but the CLO technical imbalance has significantly improved and investors don’t need to buy everything,” said a senior banker. “But still there are few to none new money deals at the moment, what you have is a repricing of 2022/2023 transactions.”

Areas, a B-/B3-rated Spanish concession catering company, is in the market with a €1.13bn A&E guided at E+500bps and 98/98.5 OID, looking to extend the €1.05bn 2026 TLB issued to back PAI Partners’ buyout in 2019 by three years — the 2019 buyout loan paid E+475 bps.

Areas was granted several state-backed loans to get through Covid, and the loan extension will repay several of these, as well as a €150m seven-year acquisition and capex facility. While travel has rebounded strongly since the pandemic, lenders questioned the company’s high capex spending, and whether there was much more room to grow into an already-levered capital structure.

“With these opportunistic travel companies coming to market, if you’re already in them then you’ll be comfortable rolling, but we’re not, so it’s tough to go ahead,” said one lender.

Also cashing in on the travel recovery is Swissport and Hotelsbed (now HBX Group). 9fin wrote about the airport service’s company’s dividend recap deal earlier in pre-marketing, and the airport services company is now in the market with a €1.2bn-equivalent TLB in euros and dollars to refinance a €600m loan and fund a €500m pay out.

Price talk for this deal is guided a S/E+450-475 and 98-98.5 OID, with commitments due on March 26.

HBX, meanwhile, is looking to reprice existing facilities paying 475bps and 525bps, and to raise an add-on to refinance its existing TLB-1 debt, while paying a dividend from cash on balance sheet. Benefiting from an upgrade to B2 during syndication, margins look to stay in line with talk at 450bps and 425bps for the 2028 and 2027 facilities, with OID talk at par and 99.75-par respectively.

Like Areas, CVC-owned Finnish private healthcare provider Mehilainen was also marketing a three year extension deal this week, pushin out maturities on its €1.21bn August 2025 TLB. Lenders had questions about the company’s heavy country concentration, and a sale process for the asset running in parallel.

But investors liked the deal, with pricing tightened from 400-425bps and 99.5 to 400bps at par, though the margin threshold step-down was lowered from 4x to 3.75x.

9fin reported that bankers at Goldman Sachs are running a dual-track process for CVC to exit the company, considering an IPO or a sale to another sponsor.

B3 German HR Software company Personal & Informatik had a similar smooth marketing process, and priced a €455 five year TLB at the lower range of the guidance pricing the loan at E+425bps and par from E+425-450bps and 99.5 talk.

An investor called it an “opportunistic deal” as P&I raised an incremental PIK note outside the restricted group to partly pay for a €434m dividend to sponsor HG Capital.

The term loan refinanced a €300m E+625 bps private credit loan from 2022, which featured a cash-conserving PIK option for €100m of the €300m total.

P&I followed several examples of private credit transactions being refinanced out in the syndicated market in recent weeks. Spanish fertility clinic chain IVIRMA priced two tranches of 2031 TLBs, €565m and $500m, to address the 2022 private debt which relevered KKR’s original €3bn buyout – the 2022 facility was priced at E+575bps and 96.5 OID.

The new TLBs priced at par and E+450bps, underlying the benefits to a syndicated refi for those which are out of non-call periods.

Astorg-owned testing and certification company Normec is also heading out of private credit territory but preserving a much-hated feature of private credit flexibility, in the shape of a delayed draw strip packaged with the main facility — just like Eleda.

Spanish maritime towing company Boluda Towage will price an A&E this Friday, which will extend its €890m 2026 TLB and add a €210m facility to fund bolt-on M&A. Pricing has tightened from E+375bps and 99.5 to 99.5-99.75 for the B1/BB-/BB facility.

The Altice-driven market carnage this week didn’t stop several bond issuers launching new issues, including two packaging makers hoping that the Ardagh concerns are… contained.

The Italian market saw two names launching FRNs this week – TLBs remain difficult for tax and structural reasons. As 9fin reported before announcement, coffee machine maker Evoca launched €550m of SS FRNs to refi its €550m E+425bps 2026 SS FRNs.

Sponsor Lone Star bought the business back in 2016 from funds led by Investcorp and Equistone Partners, with Reuters reporting in 2018 that the PE firm was considering a sale of the company. Here’s the Credit and LegalQuickTakes

Apollo-owned Reno de Medici, a manufacturer and distributor of cartonboard, is looking to price €590m of 2029 sustainability-linked SS FRNs to repay its €445m 2026 sustainability-linked SS FRNs due 2026 and €126m of the Fiskeby acquisition facility.

Read the Credit, Legal and ESG QuickTakes.

RDM's German peer Progroup AG also decided it was the right window to test the market and priced its 2029 and 2031 SSNs at 5.125% and 5.375% respectively from talk of 5.25-5.5% and 5.5-5.75%. Proceeds will refi €568m of 2026 SSNs, but €172m will go out as cash to pre-fund ongoing growth projects.

Apparel group CBR Fashion, also from Germany, went for €470m of 2030 fixed rate notes to refinance the existing 5.5% SSNs due 2026. The six year paper priced at 6.365% from talk of 6.5-6.75% and IPTs of 6.75-7%. Credit, Legal, ESG.

Bond investors welcomed the comeback of FNAC Darty, six months after the French retailer's pulled its attempt to issue €300m of 5.25NC2s, with price talk in the 5.625% area when the deal was axed.

The French company withdrew the bond citing “not enough attractive” market conditions, but since then the broader economic narrative improved, with rate cuts widely expected to happen on both sides of the Atlantic by June.

It’s been an expensive move to wait, as its new €550m 2029 bond priced at 6%, outside the yield which caused it to pull before. The company has seen deteriorating fundamentals and a rating cut since then, with Moody’s taking it down one notch to Ba3. Credit, Legal, ESG QuickTakes.

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