Authentic Brands finalizes terms for $1.675B 1st-, $500M 2nd-lien term loans

A BofA Securities-led arranger group has finalized terms on the $1.675 billion first-lien and $500 million second-lien term loans for Authentic Brands Group Inc., according to sources. Recommitments are due by 2:30 p.m. ET today with allocations to follow.

The seven-year incremental first-lien term loan finalized at a spread of 350 basis points over the secured overnight financing rate, plus a credit spread adjustment, with a 0.50% floor and an original issue discount of 99.25. Lenders are offered six months of 101 soft call protection. At final terms, yield to maturity is 4.19%.

The eight-year second-lien term loan firmed at a spread of 600 bps over the secured overnight financing rate, plus a credit spread adjustment, with a 0.50% floor and an OID of 99.25. There are hard calls of 102 and 101 in years one and two, respectively. At revised terms, yield to maturity is 6.79%.

The credit spread adjustments for both tranches are 10 bps for the one-month rate, 15 bps for the three-month rate and 25 bps for the six-month rate.

BofA Securities, Goldman Sachs, KeyBanc Capital Markets, Jefferies and UBS are joint lead arrangers on the first-lien tranche. BofA Securities is sole lead arranger on the second-lien.

First-lien ratings are B/B1, with a 3 recovery rating from S&P Global Ratings. The second-lien is rated CCC+/Caa1, with a recovery rating of 6. Corporate ratings are B/B2. ABG Intermediate Holdings 2 LLC is the borrower.

Proceeds will be used to finance the acquisition of Reebok and to support a recapitalization associated with a minority stake sale. Authentic Brands announced in August that it was acquiring Reebok from Adidas in a deal expected to close in the first quarter of 2022. The purchase price is €2.1 billion, according to Adidas, the majority of which is to be paid at closing and the remainder comprising deferred and contingent consideration.

On Nov. 22, Authentic Brands disclosed that funds advised by CVC Capital Partners and HPS Investment Partners agreed to acquire significant equity stakes in the company. BlackRock Long Term Private Capital will remain the company's largest shareholder. Simon, General Atlantic, Leonard Green & Partners, GIC, Brookfield, Lion Capital, Jasper Ridge Partners and Shaquille O'Neal also hold equity stakes in the company.

Authentic Brands was last in the loan market in February, when it completed a repricing of its covenant-lite term loan B due September 2024 that lowered pricing to L+325, with a 0.75% floor. The term loan totaled $1.597 billion at the time.

Authentic Brands Group is a brand development, marketing and entertainment company.