In one of the largest credits of its kind, a Bank of America Merrill Lynch–led arranger group has launched a $3.75 billion covenant-lite term loan package for Asurion that will be used to fund a return of capital to shareholders, according to sources. Commitments are due by noon EDT on Wed., June 27.
Dividend deals such as Asurion are seen as opportunistic issuance in the U.S. leveraged loan market, meaning issuers – or their private equity owners – take advantage of investor demand to originate credits, the proceeds of which are returned to the owners. The U.S. leveraged loan market has been red hot of late as investors crowd the floating-rate asset class thanks to ongoing and expected interest rate hikes.
The loan package includes a new $2.25 billion B-7 term loan due November 2024 and a $1.5 billion add-on to the company’s second-lien term loan due August 2025.
Price talk on the first-lien is L+300, with a 0% LIBOR floor and an OID of 99.5. That indicates a yield to maturity of about 5.55%. Lenders are offered six months of 101 soft call protection.
The second-lien guidance is L+675, with a 0% floor and an OID of 99–99.5. At talk, the yield ranges from 9.51–9.61%. Hard calls will be reset to 102 and 101.
A consent fee of 50 bps is offered to first-lien lenders and of 75 bps to second-lien lenders.
The arranger group includes Morgan Stanley, Goldman Sachs, Barclays, Credit Suisse, and Deutsche Bank.
Agencies affirmed Asurion at B+/B1, with stable outlooks, following the announcement of the share repurchase. First-lien facility ratings are B+/Ba3, with a 3 recovery rating from S&P Global Ratings. The second-lien is rated B–/B3, with a 6 recovery rating.
The issuer will also increase its revolver to $230 million and extend maturity by one year to 2023, agencies note.
Existing debt at Asurion includes its $2.6 billion TLB-4 due August 2022 and $3.2 billion TLB-6 due November 2023. Those existing term loans are priced at L+275, with a 0% floor. The original $1.8 billion second-lien term loan was placed a year ago to refinance the existing facility.
Asurion is a provider of wireless handset insurance products. The company is backed by Madison Dearborn, Berkshire Partners, Providence Equity Partners, and Welsh, Carson, Anderson & Stowe, which acquired to business in 2007, as well as other investors, including The Canadian Pension Plan Investment Board. — Jon Hemingway/ Richard Kellerhals
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