TKC Holdings launches $305M PIK-toggle term loan; commitments due today

TKC Holdings Inc. has launched a $305 million holdco PIK-toggle term loan through sole lead arranger Jefferies that will be used to fund a shareholder dividend, according to sources. Commitments are due today by 3 p.m. ET.

The five-year fixed-rate term loan would pay 12% in cash, or 13% if paying in-kind in year one and 13.5% payment-in-kind thereafter. The loan is offered at an issue price of 98-99. It will be non-callable for one year followed by call premiums at 108, 106, and 104 in years 2-4, respectively.

TKC Holdings was last in the market in May 2021 with a $525 million covenant-lite term loan B due May 2028 (L+550, 1% Libor floor) as part of a refinancing. Additional financing for the transaction included $675 million of 10.50% senior unsecured notes due May 2029 and $425 million of 6.875% senior secured notes due May 2028, and a $50 million revolver.

S&P Global Ratings and Moody's have affirmed corporate ratings for TKC Holdings at B-/B3 and the senior secured ratings at B/B1. The senior unsecured note ratings are CCC/Caa1, reflecting a one-notch upgrade by Moody's on "increased loss absorption from the issuance of the new lower-ranking, structurally subordinated holdco PIK facility." TKC Midco 1 LLC is the borrower on the new term loan, which is not rated.

TKC Holdings, backed by H.I.G. Capital, provides outsourced food and commissary services to correctional facilities.