Internet Brands drops refinancing, to issue $1B add-on term loan for dividend

Internet Brands Inc. has revised its loan deal to drop the proposed refinancing and the company now plans to issue a $1 billion incremental loan to fund a shareholder distribution, according to sources. Recommitments are due today by noon ET.

The add-on is offered at an original issue discount of 99.75 and will be fungible with the company's existing covenant-lite first-lien term loan due September 2024 that is priced at L+375, with a 1% Libor floor. At talk, the yield to maturity is 4.94%. The 101 soft call protection will be reset for six months with this transaction.

The deal comes via an arranger group led by Credit Suisse, KKR Capital Markets, RBC Capital Markets, Macquarie and Mizuho.

Internet Brands had initially launched a $4.805 billion first-lien term loan and planned to refinance its existing first-lien debt as part of the deal. The company's original first-lien term loan due September 2024 was issued in 2017 to finance the acquisition of WebMD Health. Pricing came at L+375, with a 0% floor, and with a 25-basis-point margin step-down at 4.25x net first-lien leverage. Then in June 2020, the company placed a $500 million non-fungible incremental first-lien term loan due September 2024 (L+375, 1% floor) to repay its revolver, and subsequently tacked on another $400 million in November 2020 and $450 million in February.

First-lien facility ratings are B/B2, with a 3 recovery rating from S&P Global Ratings. Corporate ratings are B/B3, with stable outlooks. MH Sub I LLC and WebMD Health Corp. are the borrowers.

In addition to its first-lien debt, the company has a $575 million second-lien term loan due 2029 (L+625, 0% floor) issued in February to refinance the existing second-lien tranche. RBC Capital Markets is administrative agent on the second-lien tranche.

KKR-backed Internet Brands operates branded websites and provides vertical software products and services, primarily in the automotive, health, legal, and home and travel markets.