UKG finalizes terms for 1st-, 2nd-lien term loan transaction tight of talk

UKG Inc. has set final terms on its first- and second-lien term loan transaction and concurrent first-lien repricing, according to sources. Re-commitments are due by noon ET today.

The add-on first-lien term loan has been upsized by $250 million, to $1.25 billion, in a shift from the new second-lien term loan, and pricing has finalized tight to talk. The incremental facility and the repricing of the issuer's existing $3.213 billion covenant-lite first-lien term loan due May 2026 are both now offered at L+325, with a 0.50% Libor floor and an issue price of par. The transaction lowers the Libor floor on the existing facility from 0.75%. The 101 soft call will be reset for six months. At final terms, yield to maturity is 3.80%.

Pricing on the new $1.45 billion second-lien term loan due May 2027 finalized tight of talk at L+525, with a 0.50% Libor floor and an issue price of par, from L+575 and an OID of 99.75 previously. The facility will have a hard call of 102 for six months and then a hard call of 101 for the next 12 months. At final terms, yield to maturity is 5.88%.

Credit Suisse is left lead and administrative agent on the first-lien tranche, and Nomura is left lead and agent on the second-lien loan. BNP Paribas is a joint lead arranger on the deal.

Investors are being told to expect first-lien ratings of B-/B1 and second-lien ratings of CCC/Caa1, with respective recovery ratings of 3 and 6 from S&P Global Ratings. Corporate ratings will be B-/B2, with stable outlooks.

Proceeds from the deal will be used to refinance the company's existing second-lien term loan due May 2027 (L+675, 0.75% floor), to pre-fund three acquisition targets and to fund a cash distribution for future M&A and/or a dividend.

UKG, backed by Hellman & Friedman, is a provider of cloud-based human capital management solutions.