US LevFin Wrap — Viasat bankers shoot for the stars, Worldpay makes a splash

Bill Weisbrod
+William Hoffman

14 September 2023•4 min read

The post Labor Day issuance spigot is on and investors have a swell of buyout, M&A and refinancing debt to analyze.

The buyside is eager to put cash to work, largely because of a supportive technical backdrop but also some encouraging signs in the US economy. If underwriters have something to sell, now is the time (with one notable X-ception).

Banks are trying to offload hung loans and bonds issued by Viasat to back its acquisition of Inmarsat, just weeks after the company’s second satellite malfunction in as many months. Take a look at our Legal QuickTake on Viasat’s bond here.

“All the pipeline stuff that we were talking about over the summer is launching now,” one banker said.

On Tuesday Worldpay kicked off the biggest leveraged financing of the year so far when it launched a $4.4bn loan deal via JP Morgan to back a majority stake acquisition by GTCR.

That loan is flying off the proverbial shelf thanks to the company’s leading market position and conservative loan-to-value ratio. Stay tuned, as a $4bn bond sale is expected to follow next week.

With a healthy amount of paper clearing the market and more chunky deals to come, we took a moment to ask — how long can this window last?

Risk appetite

Deutsche Bank is marketing a $550m term loan B to support Bain Capital’s LBO of Brazilian steakhouse chain Fogo de Chao.

The commitment deadline on that deal was accelerated by two days to 20 September. That’s in spite of some buysider concerns about growth capex spending, which center on the company’s plan to ramp up expensive restaurant buildouts amid growing anxiety around consumer spending.

Incidentally, strong spending trends at cheaper fast-casual restaurant chains has supported a spate of debt issuancefrom the sector recently, including Restaurant Brands and Flynn Restaurant Group.

“There's been a strong bid for risk over the past few months, so companies are taking advantage of that,” a portfolio manager said.

We also had a scoop on price talk, earnings and how premarketing is going for a Jefferies-led $1.1bn TLB to back KKR’s LBO of publisher Simon & Schuster. Spoiler alert: buysiders like the company’s credit profile as interest in e-books, audio books and old-school hard copies has driven steady earnings growth in recent years.

Talent agent Creative Artists Agency meanwhile raised debt to fund Artémis’ acquisition of a majority stake in the business from TPG, although it did not fully rejig the balance sheet.

Instead, it issued a $425m fungible add-on to its existing term loan. It also offered lenders a 50bps fee to both add Artemis to a list of permitted holders in order to avoid triggering full change-of-control and to allow the company to delay its earnings by up to 150 days after the end of the company’s fiscal year in September.

That left lenders wondering how ongoing strikes in Hollywood are impacting performance. Check out our previous coverage of how levfin credits in the showbiz industry are coping with the disruption here.

Clear-eyed

In one of the larger deals to hit the market this week, eye care product supplier Bausch + Lomb is trying to raise $1.9bn across bonds and loans to finance its acquisition of assets including an eye-drop drug called XIIDRA from Novartis.

Bausch + Lomb is still majority owned by beleaguered pharma company Bausch Health. While the latter’s stated plan is to fully spin off the former, prospective lenders to the new deal are trying to figure out how much additional compensation they need for the risk that the spin doesn’t actually happen.

Check out our Credit QuickTake, Legal QuickTake and ESG QuickTake for more coverage of that deal.

Turning to high yield energy, Canadian oil sands operator Greenfire Resources slapped a 12% coupon on $300m new SSNs due 2030. That generous pricing, along with an excess cash flow sweep provision got investors on board with the refinancing even though the company has a relatively short operating history and concentrated production area. We also published legal and credit QuickTakes on the deal.

Lastly, in case you missed it, the Ocean Explorer, a cruise ship operated by Australian outfit Aurora Expeditions was finally freed on Thursday after three days stuck aground off the coast of Greenland.

That incident (which did not appear to have caused any bodily injuries) prompted us to take a look back at some lowlights from high yield debt-issuing cruise operators over the years and ask some questions about incident preparedness.

One analyst told us that, fortunately for those issuers, this week’s problem at a relatively small cruise business “does not impact the investment thesis” for the overall industry.