US LevFin Wrap — Enviva smokes up, Hertz’s EV push falters, Medline reports huge gains

Sasha Padbidri
+David Bell

9 November 2023•3 min read

It’s a short week, so we’ll keep this wrap brief.

The mood in the leveraged finance primary market has calmed significantly and deal flow is slowly ramping up with at least eight new deals launching this week. This is a stark contrast to the previous two weeks where three loan transactions were pulled from the market due to macro volatility.

Investors, for the most part, are still looking at deals although fatigue is beginning to creep in.

“We’re just trying to wind down until the rest of the year and not get caught offside,” said one portfolio manager.

Wood happened here?

That smoke you're smelling isn’t from the Guy Fawkes bonfires around town — it’s from Enviva’s ongoing cash burn. The wood pellet producer is working with advisors including Lazard to explore financing solutions; it warned in an SEC filing earlier today that it “may be in breach of the leverage ratio and interest coverage covenants under its senior secured credit facility”.

The company has previously come under fire (ha!) for saying that its woody biomass counts as a renewable energy source. Brace yourselves though, things could get interesting from here. Check out our previous coverage of Enviva to get clued up on the situation.

Turn down for watt

Speaking of renewables, Hertz is seeking a non-fungible $400m add-on to its existing June 2028 TLB. But the car rental company’s push to electrify its fleet has been costly, so it’s an interesting time to be raising this slug of additional secured debt.

Other deals in the market include Veritiv’s $700m TLB due 2030. The paper and packaging company is being taken private by Clayton Dublier & Rice. Meanwhile, healthcare IT company Greenway Health is hoping that an equity injection from sponsor Vista Equity Partners will attract lenders to its $375m refinancing term loan due 2029.

Goldman Sachs is offering up staple financing in its ongoing auction for snack company Shearer’s Foods — but the auction process has also drawn interest from private credit firms, according to our sources.

In private earnings this week, medical equipment supplier Medline Industries reported significant boosts in Q3 EBITDA and cash flow as consumers shift to higher margin branded products. Team Health meanwhile posted better-than-expected earnings thanks to improved productivity and some new contract wins.

DISH on the other hand had little good news in its Q3 earnings report, posting a huge drop in EBITDA and increased cash burn as it sheds mobile and satellite TV customers. See our earnings review and our report on the company’s likely options as it faces a big maturity wall next year.

Finally, 9fin was stalking the halls at this week’s SuperReturn North America conference, where credit market veterans warned that private credit is headed for distress in the coming months. But hey, at least the Extinction Rebellion protestors didn't hijack this year's ESG panel! Here’s five more takeaways from the conference to take you into the long weekend.