Syniverse Holdings Inc. has launched a $1 billion term loan B that will be used to refinance the company's capital structure in connection with its merger with a blank check company, according to sources. Commitments are due by noon ET on Feb. 1.
Price talk for the seven-year term loan is a spread of 425-450 basis points over the secured overnight financing rate, with a 0.5% floor and an issue price of 99. The loan does not include a credit spread adjustment. There is an environmental, social and governance-related step-down feature of 7.5 bps subject to outlined key performance indicators, and the spread will step back up if the key performance indicator metric is not met. Lenders are offered six months of 101 soft call protection.
At talk, the yield to maturity is 5.02%-5.28%.
Barclays is leading the deal, and Goldman Sachs, Mizuho, BofA Securities, Credit Suisse, Deutsche Bank, BNP Paribas and Société Générale are joint bookrunners.
In August 2021, Syniverse announced an agreement to go public through a merger with special purpose acquisition company M3-Brigade Acquisition II Corp. in a transaction with an enterprise value of $2.85 billion. Under the terms of the deal, the company is expected to receive $1.165 billion in cash proceeds, including $265 million from a fully committed private investment in public equity financing and up to $400 million of cash from M3-Brigade's trust. There is also a minimum commitment of an investment of $500 million, and up to a maximum of $750 million, from Twilio Inc., which entered into a strategic partnership with Syniverse in March 2021 and will become a significant minority owner. The company intends to use the cash proceeds to reduce its debt and fund new value-added products and services.
As of Aug. 31, 2021, there was roughly $1.65 billion outstanding of Syniverse's first-lien term loan due March 2023 (L+500, 1% Libor floor) and $220 million of a second-lien term loan due March 2024 (L+900, 1% floor). As of that time, the company also had fully drawn its $85.6 million revolver.
Existing sponsor The Carlyle Group will roll 100% of its equity in the business, while new investors, through the private investment in public equity investment, will include funds and accounts managed by Oak Hill Advisors and Brigade Capital Management.
At close, the publicly traded company will be named Syniverse Technologies Corp. and is expected to trade on the New York Stock Exchange under the ticker SYNV.
S&P Global Ratings assigned corporate and facility ratings of B-, with a 3 recovery rating on the debt and a positive outlook. That's a one-notch upgrade at the issuer level to reflect "the company's reduced debt burden and our expectation for improved operating and financial performance," the agency said. Moody's assigned a first-lien issue-level rating of B2, while the Caa1 corporate rating is on review for upgrade, which would result in a B2 rating and a stable outlook.
In addition to the new term loan, committed debt financing supporting the transaction also includes a new $165 million revolving credit facility due 2027, to be undrawn at close, with a springing first-lien net leverage covenant.
Tampa, Fla.-based Syniverse provides interoperability and network services for wireless telecommunications carriers.
