US LevFin Wrap — Univar goes far, Viasat banks float big discount, Syneos gears up

Sasha Padbidri
+Bill Weisbrod

15 June 2023•4 min read

The Federal Reserve held off on an interest rate raise this week, boosting markets slightly although it also signaled two more rate hikes this year. For now at least, the window seems open for primary issuance.

Chemicals distributor Univar looks like a good barometer for market conditions as the pipeline grows. The debt financing backing its buyout by Apollo is already oversubscribed, which bodes well for other deals waiting in the wings.

“The pipeline has always been there,” said a sponsor coverage banker. “People didn’t want to have a failed process, but they were open to conversations. Some of the stuff that was lurking in the shadows are real processes now.”

Debt deals from contract research organization Syneos Health and satellite operator Viasat are expected to hit the market soon.

Goldman Sachs is leading a financing package to fund Syneos' buyout by a consortium of private equity sponsors (more on that for 9fin clients here). Sources also said this week that bankers are aiming for a pre-Labor Day launch, and the strong buyside reception to fellow contract research business Fortrea in recent days could be helpful for that syndication.

Bankers are also eager to get Viasat’s acquisition financing off their books. The company’s acquisition of UK peer Inmarsat closed a couple of weeks ago, leaving banks on the hook for the deal that was underwritten in 2021.

Thankfully for the underwriters, the company didn’t have to draw down the full commitment. But the bank group is still likely to take a loss: as we reported this week, JP Morgan is telegraphing a yield of around 12% on the bonds, which implies an extremely steep OID.

All action

There are several deals already in the market: Acosta is quietly seeking investors for a recapitalization that, among other things, would take out some shareholder notes.

The marketing services company is working with BofA on the financing package, which includes a $400m TLA and a $75m revolver. Acosta filed for Chapter 11 bankruptcy in 2019, and was then taken over by a group of funds led by Elliott Management.

Elsewhere, energy exploration and production company HighPeak got creative this week, building an innovative coupon step-up structure into an offering of $575m SUNs due 2028 that will refinance existing debt.

If the company cannot meet a series of requirements, including certain limitations on capex spending, the coupon will increase by as much as 450bp (it’s a complex structure — 9fin clients can check out our Legals QuickTake for a helpful breakdown).

If your tastes are more vanilla, there’s a deal from bakery company Hostess Brands to whet your appetite.

The Ding Dongs maker is serving up a new debt raise, comprising a $985m TLA and $200m revolver, to term out its 2025 maturities. The company is betting that demand for sweet treats will hold firm in the long term, a view that was echoed by sources speaking with 9fin.

Bubbling up

Also this week, we reported that litigation finance firm Burford Capital, which has existing debt in sterling and US dollars, is holding a series of high-yield investor education meetings arranged by Jefferies.

There may be some more supply to quench investors’ thirst further down the line, as the M&A market finally begins to stir.

Bottling company Carolina Beverage has kicked off an auction process led by BofA. A successful sale would provide an exit for Brynwood Partners, which has owned the company since 2018 — although the sponsor took some money off the table in a dividend recap last year.

Elsewhere in the beverage space (but also via BofA) alcohol company Beam Suntory is looking to divest some of its non-core assets. Let’s hope they’re not getting rid of Bill Murray.

Barca blast

Across the pond, some of our European colleagues attended the Global ABS conference in Barcelona this week.

Halfway through the event, the European Central Bank raised interest rates by another 25bp. But the mood was pretty constructive overall — check out this week’s edition of our Excess Spread column for a digest.

One especially noteworthy piece of reporting from the conference: private credit CLOs (also known as middle-market CLOs) are now gaining traction in Europe, with two to three deals anticipated to be issued over the next year.

They’re taking their lead from the US, where the product has been established for some time.

Elsewhere in US private credit, a growing number of private credit firms are wading into venture lending, taking advantage of a funding gap left by the Silicon Valley Bank meltdown — 9fin clients can read more on that from our growing private credit team here.