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Huw Simpson

Laura Thompson

BC Partners owned United Group, the south eastern Europe telecoms company, was out on Monday with €300m in fresh Senior Secured Notes due 2028 (B2/B). Initial thoughts emerged in the mid to high 4s, before settling at the tight end of PT for 4.625%.

Continuing a wide ranging acquisition spree, proceeds from the deal will fund the €85m acquisition of Optima Telekom, and place €116m on the balance sheet for ‘general corporate purposes’. The group was last in market in January this year, tapping the 4% SSNs due 2027 to fund the ~ €289m purchase of Nova Broadcasting Group. S&P assumes the group will continue with further small bolt-on M&A transactions, with credit metrics likely to improve in 2021.

Liquidity will improve after the deal, as with the prior three transactions, a portion of the offering (€95m) will term out drawings under the super senior revolving credit facility, pushing debt down the structure. In addition, RCF commitments are to be increased by €75m to €325m.

As we previewed back in June, McLaren emerged this week with its stressed refinancing. While we mused over equity injections and even some potential for HoldCo PIK, the deal emerged as $620m Senior Secured Notes due 2026 (Caa1/CCC+/B), coupled with a £374m HoldCo capital raise, and £170m from the headquarters sale-leaseback arrangement. The £993m of funds will redeem the outstanding £624m SUNs, repay £69m under the RCF, and place £285m cash to the balance sheet.

McLaren announced the equity raise last week, with £400m from Ares and Saudi Arabia’s PIF, plus a further £150m from existing shareholders including Mumtalakat - a holding company for the Kingdom of Bahrain. The abovementioned £374m Holdco capital contribution nets off the £150m repayment of the £150m Bahrain credit facility, plus certain discounts and fees.

Legals were largely based on the original terms of the existing 2022s, with some adjustments for basket sizes among other changes. Most notable is the difference in the restricted group profile or asset base since that transaction. Changes include the sale-leaseback of the headquarters, advanced discussions to sell the applied division (for a de minimis amount), and the Racing division moved outside the restricted group. As part of the transactions, heritage cars with an appraised value of c.$117m will be transferred to an entity outside the Restricted Group which backs a new RCF.

Clients can read our ESG QuickTake in full, which includes the “biggest ever F1 scandal” - whereby chief designer Michael Coughlan was suspended for two years, and McLaren fined £50m, after the group was found in possession of 780 pages of Ferrari F1 car designs.

Next up, Belgian bath and fittings manufacturer Ideal Standard announced €350m in Senior Secured Notes (B3/B-/B-) and a €15m super senior RCF, ticketed to refinance a €65m Bulgarian credit facility, and €272m to redeem a shareholder loan. The thorny combination of a chequered history, and value extraction via shareholder loan and preference equity repayments contributed to chunky IPTs in the low to mid 6s. Final terms emerged late on Friday, with a 6.375% coupon and 98.95 OID offering a yield of 6.625%. The offering also downsized €25m, with a concurrent decrease in the dividend.

S&P weren’t particularly constructive in their judgement of the new capital structure, describing it as “highly leveraged in the context of the business' moderate size, with limited growth prospects and high exposure to competitive markets”. After an amended swap deal in 2018, ownership of the group is held by Anchorage (80%) and CVC (20%), and it’s worth mentioning the deal contains portability at opening leverage (3.6x).

Late on Friday, debut issuer PeopleCert announced €300m Senior Secured Notes due 2026 (B2/B/B), with proceeds to repay a bridge facility used to acquire Axelos. The majority of the Ed-tech’s revenue derives from exam provision, as well as online invigilation and content.

DIY retailer Maxeda announced a €90m shareholder distribution on Wednesday. If you would like a copy of our more detailed look at the deal Maxeda’s EUR90m Share Buyback - What Baskets Could It Have Used? get in touch team@9fin.com. 

UK Oil and Gas group Ithaca Energy was in market offering $625m Senior Notes due 2026, which alongside a $175m drawing under the RBL facility will redeem the existing notes and partially repay a subordinated shareholder loan to owner Delek. Price talk emerged at 8.75-9.00% on Thursday, with final pricing at the wide end for 9.00%. Clients can read our Credit, Legal and ESG QuickTakes in full.

Stonegate Pubs marketed a £165m tap (B3/B+) of its 8.25% Senior Secured Notes due 2026, alongside a consent solicitation to allow the company to raise additional senior secured debt up to £225m. The tap priced on Thursday evening at 103.5, with existing holders offered a 10 bps fee for their consents. 

Global auto supplier Valeo came out on Friday with a Euro benchmark size sustainability linked bond (Baa3/BB+), offered under the EMTN programme. The SLB step-up will be linked to the company's ability to reduce CO2eq by 37.95 million tons.

And finally, cash generation continues to amuse the levfin twittersphere.

It’s a heatwave and a dealwave in lev loan land. This week, there is €7.6bn-equivalent of deals still out in the market – hot, but decidedly down from last week’s €14bn scorcher as companies rush to close ahead of the migration from bank to beach. More than twice as many loans closed this week than opened, however complaints of over-work have not subsided, with some buysiders playing on deals they “do not even have the time to look at the docs on”.

Our tech overlords dominate the market this week. First, outsourced customer management servicer Webhelp is out with a €580m-equivalent dual-currency TLB (B2/B). The company is out to acquire OneLink from One Equity Partners, as well as refinance existing OneLink debt. The company is hoping to capitalise on a robust 2020, with general accelerated digitalisation due to the Covid pandemic translating into increased demand for their online customer service support.

Next, German software firm Think-Cell, which provides Microsoft PowerPoint software to businesses, is vying for buysider attention with its €540m TLB, guiding high at E+450 bps and 98.5-99 OID. Cinven bought a majority stake in the company last month, nearly twenty years after its founding in 2002. The company has 850,000 paying users as of May 2021.

Finally, digital advertising and marketing firm S4 Capital tops the ratings this week. Out with a €375m TLB, S4 Capital won Ba3/BB-/BB ratings - but is pairing that with a lofty E+400 bps margin with founder and boss both a key risk and a key business driver.

One buysider suggested that some of that eye-catching margin might be compensating for the company’s infancy: S4 Capital was formed just three years old after founder Martin Sorrell left UK media conglomerate WPP on a sour note. It has shot up since, zooming through 23 mergers and acquisitions, per Fitch. Clients can read a Credit QuickTake on this new name here or request a Loan Legal QuickTake by emailing loans@9fin.com.

Labeyrie Fine Foods’ €455m TLB (B2), guiding at E+425-450 bps and 99.5 OID, is still on the table, however some buysiders are finding it hard to digest the deal’s docs and ESG risks.

The ESG concerns swirl around the pesticides Labeyrie pours into the oceans at its salmon fishing farms. Azamethiphos and emamectin are widely used by salmon farmers to kill sea lice, with use increasing after restrictions on both eased in April 2020 to help farms cope with the pandemic. According to the European Medical Agency, azamethiphos is highly toxic to birds and other aquatic life, while emamectin can prove fatal to shellfish. These prove both a regulatory and public image risk, buysiders report.

They were also put off by the docs on the deal, specifically provisions that would allow the company to go to Laberyie’s other shareholder, the Basque Lur Berri – rather than the known entity of PAI Partners – without triggering a change of control. A third buysider concurred: “I don’t know that company and I’m not comfortable with that.”

Rolling on from last week’s bonanza, a huge slog of deals closed this week ahead of the UK summer holidays. At least ten deals – to the tune of around €6.5bn – cleared the market this week, giving some buysiders hope for a coming lull.

First off, French landscaper and grounds maintenance provider Idverde (B3/B) clipped and trimmed the week’s highest margin on its €335m TLB, closing at E+500 bps and 98 OID. Although the number one player for B2B landscaping in France, the UK and Denmark, rating agencies wilted on the company’s narrow business focus in a highly fragmented market. Funds will be used to refinance a uni-tranche facility.

Elsewhere, market returner and data provider Kantar’s €950m TLB (B2/B-) closed at the tight end of guidance at E+425 bps and 99.75, beating out June 2021’s go by 25 bps. Another recent issuer, UK nursery operator Busy Bees, priced its €275m add-on in line with guidance at E+375 bps and a 98.5 OID - equal to its March 2021 deal.

Pest control firm Anticimex also wormed its way into buysider books with its triple-currency ESG-linked SEK16bn-equivalent (€1.6bn) TLB this week. The €685m euro tranche firmed at the tight end of guidance to E+375 bps; the $815m dollar tranche lopped 25 bps off the tight end of guidance to firm at L+350/99.5 bps; and the AUD315m closed at BBSY+400 bps from BBSY+425 bps at launch. Buysiders had bought into the bug buster’s recent track of successfully integrated acquisitions, climbing revenues and a long-term relationship with sponsor EQT. 

And finally, two LBO deals closed this week. Ireland’s waste management and recycled energy firm Beauparc cleaned up on its €525m TLB (B/B1) yesterday, upsized €30m from €525m, with the excess plumping up cash on balance sheet. The company compensated for its relatively small size by guiding high for a B1 at E+375-400 bps, albeit tightening to E+375 bps at close. The company’s impressive growth in a stable, essential sector, closed off by high barriers to entry, paired with a “clear” ESG story, saw buysiders finding this waste collector a diamond in rough. 

Netherlands-based educational publisher Infinitas Learning priced its€489m TLB at the tight end of its E+450-475 bps, plus a 99.5 OID. Funds back its buyout by MPM Capital.

WeBuyAnyCar.com owner Constellation Automotive pulled in a €400m/£400m TLB (B2/B-) at E+400 bps and S+475 bps respectively, each coming in at the tight end of guidance. A £325m second lien (Caa2/CCC) priced at S+750 bps.

Global financial services provider Apex Group also took commitments on its €1.392bn-equivalent refi and acquisition loan.

Netherlands-based Affidea also finalised its€150m add-on (B2/B) yesterday, witht he diagnostic imaging and cancer care company winding in margins of E+375 bps and a 99.5 OID.

A week without a healthcare deal? Sacrilege. This time it’s a combo of UDG Healthcare and Huntsworth, joining forces to create an end-to-end communications and marketing servicer for pharma and biotech customers. A dual-currency $2.41bn-equivalent TLB and pre-placed £330m second lien loan back CD&R’s acquisition of UDG.

UK-headquartered Waterlogic launched a $800m refi today, split between a $400m and $400m-equivalent euro tranche. This comes two months after PE firm Castik Capital’s single asset fund, EPIC I-b, drank down a controlling stake in the company at its hard cap of €700m.

There were again no broad movements in Secondary this week, with an average loss of just -0.07 pts (61% -0.23 pts | 35% +0.21 pts). By Industry, defensive sectors Utilities (+0.06 pts) and Healthcare (+0.04 pts) made the only - albeit small - gains. At the other end, Real Estate, Energy, and Financials all moved down an average of -0.19 pts.

The iTraxx European Crossover remained steady at 234 bps, just a single bps inside last week. In European domiciled HY credit fund flows, Global HY (+$7m) and Euro HY (+$14m) focused funds both saw marginal inflows, while US focused funds were punished (-$199m).

Ranjit Singh, the eponymous ‘Chicken King’ struck out at the government today, suggesting supply chains require urgent support, else the “toxic cocktail” of Brexit and the pandemic will leave bare shelves and panic buying in supermarkets. 2 Sisters has seen 15% labour shortages this year, alongside feed inflation at an eight year high.

“We are operating in a framework that’s complete madness and the Government needs calling out for sticking their heads in the sand”

A government turnabout moved from daily tests for workers in the food sector yesterday, to exemption from isolation rules amid concerns surrounding the ‘pingdemic’. Boparan’s 2025 SSNs are today trading at around 90 pts, having steadily fallen from par in mid-April.

Big moves this week come from Cineworld, down -5.6 pts to 80.5 pts on its €607.7m E+263 bps 2025 TLB. Fitch placed the cinema chain on negative watch in May 2021, citing a $255m claim from shareholders unhappy following Cineworld’s acquisition of Regal Entertainment Group that Fitch writes could lead to a Q3 liquidity crisis. The agency also notes uncertainties around the company’s liquidity, with Cineworld burning around $60m of cash per month during cinema closures, plus a dim picture on future attendance.

On the other side, Christ ascends +4.5 pts to 75 pts on its €170m E+450 bps 2021 TLB. The German jeweller was founded in 1863 and has been owned by UK mid-market PE firm 3i since 2014 after 3i bought a €214m majority stake. The TLB matures just five months away in December. A €25m E+350 bps RCF, extended during a reorganisation in 2018, also expires this November, according to Christ’s 2019 report, meaning a total of €195m upcoming.

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