Cengage launches $1.59 billion term loan B at Libor plus 450-475 bps

By Sara Rosenberg

New York, May 17 – Cengage Learning Inc. launched at its bank meeting on Tuesday a $1.59 billion seven-year senior secured covenant-light term loan B (Ba3/BB-) with price talk of Libor plus 450 basis points to 475 bps with a 1% Libor floor and an original issue discount of 99, according to a market source.

The term loan has 101 soft call protection for six months, the source said.

Security is a first priority lien on substantially all assets of the borrower and a second priority lien on accounts receivable, inventory and cash.

Morgan Stanley Senior Funding Inc., Credit Suisse Securities (USA) LLC, BMO Capital Markets Corp., Citigroup Global Markets Inc., Goldman Sachs & Co., Wells Fargo Securities LLC, Deutsche Bank Securities Inc. and KKR Capital Markets LLC are the leads on the deal.

Commitments are due on May 26, the source added.

Proceeds will be used to refinance existing debt, fund a distribution to existing shareholders and pay related fees and expenses.

Other funds for the transaction will come from $740 million of unsecured debt.

Cengage is a Boston-based educational content, technology and services company for the higher education and K-12, professional, library and workforce training markets.

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