ADT term loan B rises with amendment launch; PetVet Care, Newport Group join calendar

By Sara Rosenberg

New York, March 12 – ADT Inc. (Prime Security Services Borrower LLC) saw its term loan B head higher in trading on Tuesday after details of a proposed amendment request surfaced, along with plans for a partial paydown.

Moving to the primary market, PetVet Care Centers LLC and Newport Group came out with plans to launch syndication of incremental first-lien term loans, and PetVet released price talk on its debt ahead of its upcoming lender call.

ADT strengthens

ADT’s term loan B gained ground in the secondary market on Tuesday as, in connection with its lender call, the company outlined its amendment proposal and intention to repay some of the loan borrowings, according to traders.

One trader quoted the term loan B at 99¾ bid, 100¼ offered, up from 99¼ bid, 99¾ offered, and a second trader quoted the term loan B at 99½ bid, par offered, up from 99 3/8 bid, 99 7/8 offered.

The credit agreement amendment would modify the first-lien net leverage ratio covenant to 4.6 times from 3.3 times, revise the incremental capacity and make changes to the restricted payment capacity.

Also, the amendment would consolidate the Boca Raton, Fla.-based security services company’s identical $50 million revolver and $350 million revolver into one $400 million tranche.

Revolver and term loan B lenders are being offered a 50 basis points amendment fee.

Consents are due at noon ET on Friday and closing is planned for that day.

Barclays is the administrative agent on the credit facilities.

ADT contemplates notes

The purpose of ADT’s credit agreement amendment is to facilitate a refinancing through the issuance of new notes so as to provide significant interest expense savings and extend the company’s maturity profile, the company said in an 8-K filed with the Securities and Exchange Commission.

To that end, the company is considering issuing up to $1.5 billion of new first-lien senior secured notes in one or more tranches, of which $1 billion would be used to refinance a portion of its second-lien senior secured notes due 2023 and $500 million would be used to pay down some of its existing term loan B due 2022.

ADT is also contemplating issuing up to $1.15 billion of new senior unsecured notes to refinance its existing second-lien senior secured notes due 2023.

It is expected that any new first-lien notes would mature outside of the existing term loan B due 2022.

There is currently about $3.92 billion outstanding under the existing term loan B.

Net first-lien leverage is currently 2.8 times, and it would increase to 3.2 times if the refinancing is completed. Net total debt is currently 3.6 times, and it would increase to 3.7 times if both the secured and unsecured notes are issued. And, net secured debt is currently 3.6 times, and it would decrease to 3.2 times if the secured and unsecured notes are sold.

PetVet readies loan

Over in the primary market, PetVet Care Centers set a lender call for 9 a.m. ET on Wednesday to launch a fungible $125 million incremental first-lien term loan due Feb. 14, 2025 talked at Libor plus 325 bps with a 0% Libor floor, an original issue discount of 96.5 to 97 and 101 soft call protection until May 9, a market source remarked.

The spread, floor and call protection on the incremental loan match the existing term loan terms.

Commitments are due at 1 p.m. ET on Friday, the source added.

Jefferies LLC and KKR Capital Markets are leading the deal that will be used to repay an existing revolver draw and fund cash to the balance sheet to fund acquisitions under letters of intent and other future acquisitions.

PetVet is a Westport, Conn.-based acquirer and operator of general practice and specialty veterinary hospitals for companion animals.

Newport on deck

Newport Group will hold a lender call at noon ET on Wednesday to launch a fungible $63.5 million add-on first-lien term loan, according to a market source.

Commitments are due at noon ET on March 20, the source said.

RBC Capital Markets is leading the deal.

The company’s existing $240 million first-lien term loan is priced at Libor plus 375 bps with a 0% Libor floor.

Newport Group, a Kelso & Co. portfolio company, is a Walnut Creek, Calif.-based provider of retirement services and consulting services related to retirement plans.

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