Edelman Financial sets price talk on 1st-lien, 2nd-lien loan transaction

Morgan Stanley and J.P. Morgan this afternoon launched a new senior secured credit facility for Edelman Financial Engines LLC, sources said, noting that commitments will be due by noon ET on March 19.

The transaction includes:

* A $1.426 billion first-lien term loan B amendment and extension that seeks to extend the maturity of the loan to March 2028, from 2025. The loan is guided at L+350, with a 0.50% Libor floor and an amendment fee of 12.5 bps.

* An $800 million fungible add-on first-lien term loan B that is talked at L+350, with a 0.50% Libor floor and an original issue discount of 99.5. At talk, yield to maturity is approximately 4.15%.

* A $475 million second-lien term loan amendment that is guided at L+675, with a 0% Libor floor and an amendment fee of 25 bps. The second-lien term loan will still be due in July 2026.

* A $100 million fungible add-on to the second-lien facility that is talked at L+675, with a 0% Libor floor and an OID of 99. At initial guidance, yield to maturity is roughly 7.35%.

Lenders are offered six months of 101 soft call protection on the first-lien tranche, while the second-lien tranche has hard calls of 101 and 100 in years one and two, respectively. There is also a call at par upon an IPO. Morgan Stanley is left lead arranger and administrative agent on the first-lien tranche and J.P. Morgan is left lead and administrative agent on the second-lien tranche.

Proceeds from the additional debt will be used alongside cash on hand to fund a distribution to shareholders.

S&P Global Ratings has affirmed its first- and second-lien ratings to B and CCC+, while lowering its recovery rating on the first-lien tranche to 4, from 3, and affirming its second-lien recovery rating of 6. The issuer rating has been affirmed at B, with a stable outlook. Current Moody's ratings are B2 and Caa2 for the first- and second-lien term loans, with a B3 issuer rating with a stable outlook.

The issuer was last in the market in 2018 with the first- and second-lien term loans supporting the takeover of Financial Engines by The Edelman Financial Center. A $1.455 billion first-lien term loan due 2025 priced at L+325, with a 0% floor, while a $475 million second-lien facility due 2026 wrapped at L+675, with a 0% floor.

The company provides financial-planning and investment-management services. Earlier today, Warburg Pincus announced its acquisition of a minority stake in the firm, valuing the company at around $7.3 billion, including debt, according to reports. Edelman has more than $260 billion in assets under management. Hellman & Friedman retains a majority stake in the company.