18 Nov, 2021

Fender Musical Instruments completes $400M term loan tight to talk; terms

Investors have received allocations of the $400 million first-lien term loan for Fender Musical Instruments Corporation. that priced tight to talk and will be used to finance the company's acquisition of PreSonus Audion Electronics and to refinance debt, according to sources. The seven-year term loan, which was upsized by $25 million, priced at a spread of 400 basis points over the secured overnight financing rate plus a credit spread adjustment, or CSA, and an original issue discount of 99.5 via lead arranger J.P. Morgan. The term loan entered the aftermarket at 99.875/100.375. The CSA is 10 bps for a one-month rate, 15 bps for a three-month rate and 25 bps for a six-month rate. There is a 0.50% floor. Financing also includes a $100 million asset-based revolving credit facility due 2026. Fender Musical Instruments, backed by Servco Pacific Capital, manufactures, distributes and markets various musical instruments.

Terms:

Borrower Fender Musical Instruments Corp.
Issue $400 million first-lien term loan
UoP M&A, Refinancing
Spread SOFR+CSA+400
SOFR+CSA floor 0.50%
Price 99.50
Tenor 7-year
YTM 4.67%
Four-year yield 4.72%
Call protection 101 soft call for 6 months
Corporate ratings B/B1
Facility ratings B/B2
Recovery ratings 3
Financial covenants None
Arrangers JPM
Admin agent JPM
Px Talk Sofr+CSA+425-450/0.5%/99
Sponsor Servco Pacific Capital
Notes CSA: 10/15/25 bps. Upsized by $25 million.