Summit Health trades up with acquisition news; OpenText, Gates, Spirit AeroSystems set talk

By Sara Rosenberg

New York, Nov. 7 – Summit Health-CityMD’s term loan headed higher in the secondary market on Monday following an announcement that the company is being purchase by VillageMD.

And, in the primary market, OpenText Corp., Gates Global and Spirit AeroSystems released price talk on their term loan transactions in connection with their lender calls, and Delek US Holdings Inc. joined this week’s new issue calendar.

Summit gains ground

Summit Health’s term loan rose to 99 bid, par offered on Monday from 98¼ bid, 99¼ offered on Friday after news emerged that the company is being bought by VillageMD, a market source said.

The acquisition is valued at about $8.9 billion split between $7 billion equity value and $1.9 billion of net debt, with investments from Walgreens Boots Alliance Inc. and Evernorth, a subsidiary of Cigna Corp.

Walgreens will invest $3.5 billion through an even mix of debt and equity to support the acquisition, and will remain the largest and consolidating shareholder of VillageMD with about 53% ownership.

Closing is expected in the first quarter of 2023, subject to the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other customary conditions.

Summit is a provider of primary, specialty and urgent care. VillageMD is a Chicago-based provider of primary care options.

OpenText guidance

Moving to the primary market, OpenText held its lender call on Monday afternoon and announced price talk on its $3.085 billion seven-year senior secured term loan B (Ba1/BBB-/BBB-) at SOFR+10 basis points CSA plus 350 bps with a 0.5% floor and an original issue discount of 96 to 97, a market source remarked.

The term loan has 101 soft call protection for six months.

Commitments are due at noon ET on Nov. 16, the source added.

Barclays, BMO Capital Markets Corp., RBC Capital Markets, Citigroup Global Markets Inc., MUFG, HSBC Securities (USA) Inc., PNC Capital Markets, National Bank of Canada and CIBC are leading the deal that will be used with $1.5 billion of other senior secured debt to fund the acquisition of Micro Focus International for 532 pence per share, implying an enterprise value of about $6 billion inclusive of Micro Focus’ cash and debt.

Closing is expected in the first quarter of 2023, subject to Micro Focus shareholder approval, the sanction of the Scheme by the Court, and antitrust and foreign investment approvals.

OpenText is a Waterloo, Ont.-based software provider of business-to-business cloud integration services. Micro Focus is a Newbury, England-based enterprise software company.

Gates holds call

Gates Global hosted a lender call at 10 a.m. ET, launching a $575 million seven-year senior secured covenant-lite term loan B (Ba3/B+) at talk of SOFR plus 375 bps to 400 bps with 0 bps CSA, a 0.5% floor, an original issue discount of 96 and 101 soft call protection for six months, according to a market source.

Commitments are due at noon ET on Wednesday, the source added.

Citigroup Global Markets Inc. is the left lead on the deal. Credit Suisse is the administrative agent.

The new debt will be used to refinance the company’s existing euro term loan B and pay related fees and expenses.

Closing is expected during the week of Nov. 14.

Gates is a Denver-based manufacturer of application-specific fluid power and power transmission solutions.

Spirit shops refinancing

Spirit AeroSystems held a lender call at 11 a.m. ET to launch a $594 million senior secured five-year covenant-lite first-lien term loan B (Ba2) talked at SOFR plus 450 bps with 0 bps CSA, a 0.5% floor, an original issue discount of 96 to 97 and 101 soft call protection for six months, a market source said.

Commitments are due at noon ET on Wednesday, the source added.

Morgan Stanley Senior Funding Inc. and BofA Securities Inc. are leading the deal. BofA is the administrative agent.

The new loan will be used with $800 million of senior secured notes to refinance an existing term loan B, tender for all $500 million of the company’s 5½% senior secured first-lien notes due 2025 and redeem 3.95% senior notes due 2023.

Spirit AeroSystems is a Wichita, Kan.-based designer and builder of aerostructures for both commercial and defense customers.

Delek on deck

Delek emerged with plans to hold a lender call at 3:30 p.m. ET on Tuesday to launch a $950 million seven-year covenant-lite term loan B, a market remarked.

Talk on the term loan is SOFR+10 bps CSA plus 350 bps with a 0.5% floor, an original issue discount of 96 and 101 soft call protection for six months, the source added.

Commitments are due at noon ET on Thursday.

Wells Fargo Securities LLC and MUFG are leading the deal that will be used with cash on the balance sheet and ABL facility borrowings to refinance an existing term loan B due 2025 and add-on term loan B due 2025.

Delek is a Brentwood, Tenn.-based owner and operator of crude oil and refined products logistics and marketing assets.

Fund flows

In other news, actively managed loan fund flows on Friday were negative $103 million and loan ETFs were negative $19 million, according to market sources.

Loan indices rise

IHS Markit’s iBoxx loan indices were higher on Friday, with the Leveraged Loan indexes (MiLLi) closing out the day up 0.09% and the Liquid Leveraged Loan indices (LLLi) closing out the day up 0.10%.

Month to date, the MiLLi is up 0.30% and year to date its down 2.47%. The LLLi is up 0.33% month to date and down 3.12% year to date.

Average secondary market bids in the U.S. on Wednesday were 92.36, up 0.01% from the previous day and down 4.64% year to date.

According to the IHS Markit data, some of the top advancers on Friday were Venator’s June 2017 covenant-lite term loan B at 68.5, up from 62, Loyalty Ventures’ November 2021 covenant-lite term loan B at 33.25, up from 31, and Greenway Medical’s February 2017 covenant-lite term loan at 89.1, up from 86.08.

Some top decliners on Friday were Trinseo’s May 2018 covenant-lite term loan at 88.25, down from 93.5, National CineMedia’s June 2018 term loan B at 38.3, down from 40.05, and Mitel Networks’ November 2018 covenant-lite fourth our no roll up term loan at 30, down from 30.83.

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