Applied Systems upsizes add-on term loan B to $470M, to reprice existing loans

Applied Systems Inc. has upsized its incremental first-lien term loan by $50 million to $470 million, and expanded the transaction to include a repricing of both the existing $1.35 billion first-lien and $615 million second-lien term loans, according to sources. Commitments to the Nomura-led deal remain due by noon ET on March 2.

On the covenant-lite first-lien term loan due September 2024 there will be no change to the spread, which is set to L+325 when first-lien net leverage is greater than 4.75x and at L+300 when it is at or below 4.75x. However, the Libor floor will be reduced to 0.5%, from 1%. Both the repriced loan and the fungible add-on are offered at par and the 101 soft call protection will be reset for six months for the entire tranche.

Price talk on the covenant-lite second-lien term loan due September 2025 is L+550-575, with a 0.75% floor, offered at par. It will be covered by a 101 hard call for 12 months. Pricing on this tranche would be lowered from L+700, with a 1% floor.

At talk, the yield to maturity is 3.80% on the first-lien term loan and 6.40%-6.66% on the second-lien.

Proceeds from the add-on will be used to fund the acquisition of EZLynx, which was announced Jan. 14, and to provide cash for general corporate purposes and to pay fees and expenses.

First-lien facility ratings are B-/B2, with a 3 recovery rating from S&P Global Ratings. The second-lien is rated CCC/Caa2, with a recovery rating of 6. Corporate ratings are B-/B3, with stable outlooks on both sides.

The company is also increasing its revolver to $80 million from $50 million, rating agencies note.

Applied Systems, backed by Hellman & Friedman, is a global cloud software provider to the property and casualty and benefits insurance industry.