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Convergint Technologies offers price talk for 1st-lien, 2nd-lien term loans

Convergint Technologies LLC has launched $1.11 billion of first-lien and $305 million of second-lien covenant-lite term loan financing via a Credit Suisse-led arranger group to back a dividend recapitalization, according to sources. Commitments are due by 5 p.m. ET on March 17.

The first-lien term loan is comprised of a $930 million funded tranche and a $180 million delayed-draw term loan. Price talk on the seven-year term loan is L+375, with a 0.75% Libor floor and an issue price of 99.5. Lenders are offered six months of 101 soft call protection.

Ticking fees on the delayed-draw kick in after 45 days, initially at 50% of the margin for days 46-75, and then stepping to 100% of the margin thereafter.

Price talk on the eight-year second-lien term loan is L+675, with a 0.75% floor and an issue price of 99.5. There are hard calls at 102 and 101 in years one and two, respectively.

At talk, the yield to maturity is 4.67% on the first-lien and 7.81% on the second-lien.

Thus far, Moody's affirmed the B3 corporate rating on the borrower, DG Investment Intermediate Holdings 2 Inc., and assigned a B2 rating to the first-lien facilities and a Caa2 rating to the second-lien. The agency notes that proceeds from the deal, along with $146 million of balance sheet cash and $200 million of new preferred equity, will be used to refinance $990 million of existing debt and pay a $583 million dividend.

In addition to the term loans, the company will have a $150 million, five-year revolving credit facility with a springing first-lien net leverage covenant.

For reference, pricing is L+300 on the company's existing covenant-lite first-lien term loan due February 2025, and L+675 on its second-lien loan due February 2026, both with a 0.75% Libor floor. The loans were originally put in place in 2018 to finance the buyout of the company by Ares Management.

Convergint Technologies is a global service-based systems integrator.