RCS Capital ups first-lien term loan to $575 million, updates pricing

By Sara Rosenberg

New York, March 20 - RCS Capital Corp. upsized its five-year first-lien term loan (B2/B+) to $575 million from $550 million and set pricing at Libor plus 550 basis points, the wide end of the Libor plus 500 bps to 550 bps talk, according to a market source.

Also, the original issue discount on the first-lien term loan firmed at 99, the tight end of the 98½ to 99 talk, and the amortization was changed to 5% in year one, 10% in years two and three and 15% in years four and five, from just 5% per annum, the source said.

As before, the first-lien term loan has a 1% Libor floor and soft call protection of 102 in year one and 101 in year two.

In addition, the company firmed pricing on its $150 million seven-year second-lien term loan (Caa1/B-) at Libor plus 950 bps, the low end of the Libor plus 950 bps to 975 bps guidance, and tightened the original issue discount to 98½ from 98, the source said.

The second-lien term loan still has a 1% Libor floor and is non-callable for two years, then at 103 in year three and 101 in year four.

Financial covenants include a maximum total leverage ratio, a minimum fixed charge coverage ratio and minimum regulatory capital.

The company's now $750 million senior secured credit facility, up from $725 million, also provides for a $25 million three-year revolver (B2/B+) that will be undrawn at closing.

Recommitments were due by 5 p.m. ET on Thursday.

Barclays and Bank of America Merrill Lynch are the bookrunners on the deal.

Proceeds will be used to help finance the acquisition of Cetera Financial Group from Lightyear Capital for $1.15 billion, to refinance Cetera debt and, due to the upsizing, to fund the balance sheet, the source added.

Other funds for the transaction will come from equity from Luxor Capital Group and cash on hand.

Closing is expected in the second quarter, subject to Finra approval and other customary conditions.

RCS is a New York-based holding company that operates and grows businesses focused on the financial services industry. Cetera is an El Segundo, Calif.-based financial services holding company that provides independent broker-dealer services and investment advisory services.

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