Benchmark prior transactions, bonds, loans or company profiles using over 300 credit metrics.

Comparables

AI transcripts & instant analysis, making earnings season easier than ever.

Earnings

A full suite of ESG data and analysis. Built for your workflow

Spot undervalued credits and potential future restructurings with our purpose-built tools.

Distressed and Restructuring

Full Financial profiles with 3 statements, KPIs, segment splits & credit metrics. All traced to source documents.

Financials

New deal analysis and covenant comparison tools, understand key risks in seconds not days.

Covenants

Say goodbye to CTRL + F with our powerful search. Thousands of documents text searchable for any keyword or phrase.

Search

We've successfully predicted more than 65 price sensitive events - before they happened.

Deal predictions

We use AI to aggregate newsflow from 2,000 sources, and deliver it to your inbox quicker than anyone else.

News

Track high yield deals from issuance through to maturity, with integrated legal, credit and ESG analysis.

High Yield Bonds

Shine a light on private markets with 9fin's news and legal analysis of syndicated loans

Leveraged Loans

21st century tech and expert analysis to help CLO teams make informed decisions faster.

Structured Credit 

Find information others can't see in one of the fastest growing corners of finance

Private Credit 

Will Caiger-Smith

TKC Holdings’ latest deal ticks a lot of controversy boxes for the buyside: a holdco PIK toggle (usually unpopular) to fund a dividend (also unpopular) from a prison food-service provider (again, unpopular) that struggled last time it came to the debt markets (hardly encouraging).

The $320m deal (upsized from $305m) is also a straight-up dividend financing, as opposed to a full divvy recap, so there’s no official liquidity event for existing lenders who might disapprove. Curiously, it’s in term loan format (unusual for a PIK toggle) but with a fixed-rate coupon and bond-like call premiums.

The choice of loan format is atypical, but sources told 9fin it reflects the tastes of at least two anchor investors that are taking the majority of the deal. It also comes after several new-issue flops in the high yield bond market, such as Covis Pharma’s acquisition financing.

The deal was mostly spoken for by the time it launched, but attracted plenty of new eyeballs with its price talk: a fixed 12% cash coupon, or 13% PIK (rising to 13.5% PIK in year two) and offered at a 98-99 OID. The final coupon was in line with talk, and the final OID was 98.

Still, many investors who were attracted by the juicy yield on offer found the deal hard to stomach for ESG reasons. 

Owned by H.I.G. Capital, TKC provides catering and commissary services to correctional facilities. This puts it in a similar bucket as prison phone operators such as Securus and Global Tel*Link, which have drawn scrutiny from politicians critical of the correctional industry. 

Credit Suisse, a joint lead on TKC’s last deal, was absent this time, with Jefferies flying solo. This follows a trend of investment banks—with some exceptions—shirking prison-related credits in recent years (CS declined to comment, and Jefferies didn't respond).

Putting ESG aside for a second, TKC had a great pandemic: after prisons suspended visitation rights, the company posted its best full-year earnings ever, benefiting from higher commissary sales as people put together care packages for incarcerated loved ones. 

Earnings have continued to be strong since then. According to 9fin sources, the company reported revenue of $1.92bn and EBITDA of $312m for the twelve months ended October 31, 2021. That’s up from $1.785bn of revenue and $285m of EBITDA as of December 31, 2020.

Given that performance, few sources felt that H.I.G. was out of bounds in seeking a payout. But some did question whether this deal reflected the difficulty of selling a company like TKC in a world increasingly focused on ESG, given the scrutiny the prison industry can attract.

Elsewhere in the sector, Global Tel*Link recently raised a $215m second lien term loan to fund a dividend to its parent, American Securities. So it appears that the debt markets are open for these borrowers, at least for now. 

But the ESG factor is gradually reducing the universe of sponsors and lenders that are willing to back them, as demonstrated by TKC’s difficult bond syndication last year. 

“You have to wonder what is the ultimate takeout for these ESG-sensitive companies,” said one source familiar with the company. “At some point lenders are probably going to become less willing to extend, so it could become a game of musical chairs.” 

Earnings trajectory is also a consideration for TKC, in case its pandemic tailwinds dissipate. And given the company’s high leverage (sources told 9fin the new deal will push it north of 6x), free cash flow will be a key metric to watch. 

The company pays Libor+ 550bps (1% floor) on its $525bn TLB due 2028, 6.875% on $425m of secured bonds due 2028, and 10.5% on its $675m unsecured 2029s. If this new loan’s coupons are paid in cash, they will add $36.6m of annual interest costs.  

TKC and H.I.G. Capital did not respond to requests for comment.

TKC — a tough PIK, even if you like prison food

Owen Sanderson

Excess Spread — Sweet release, baked Danish

9fin team

Webinar Replay — Free fallin': Chapter 11 trends that defined 2025 and what's next

Sasha Padbidri

Luke Viner

The Singapore cross-class cramdown provision’s future is now

Webinar Replay — The art of the LME: defining trends in 2025, and looking ahead to what’s next

Save time, react faster to news, outperform your peers.

Asset Managers & Hedge funds

Save time, pitch more efficiently, and win business.

Investment Banks

Turbocharge your trading desk P&L, with the market's fastest news alerts.

Sales & Trading

Spot novel covenants, save time drafting and win business.

🍪 Our Cookies

TKC — a tough PIK, even if you like prison food

Read all our public content for free

Recently Published

Excess Spread — Sweet release, baked Danish

Webinar Replay — Free fallin': Chapter 11 trends that defined 2025 and what's next

The Singapore cross-class cramdown provision’s future is now

Webinar Replay — The art of the LME: defining trends in 2025, and looking ahead to what’s next

What are you waiting for?