January expected to be busy month for primary leveraged loan market; Digital River on tap

By Sara Rosenberg

New York, Jan. 2 – The start to the new year was quiet in the loan market, but market participants are expecting activity to pick up dramatically in the new issue market within the next two weeks, according to a market source.

So far, the January calendar only includes Digital River Inc.’s senior secured credit facility, with the bank meeting for the transaction expected in mid-January.

And, although leads have yet to disclose expected timing on the Advisory Board Co., IPC Systems Inc. and Dynacast International deals, closing on these transactions are targeted for the January/February timeframe, making it likely that they will come to market soon.

Digital River readies deal

Based on a recent filing with the Securities and Exchange Commission Digital River’s credit facility is anticipated to be sized at $345 million, split between a $10 million revolver, a $255 million first-lien term loan and an $80 million second-lien term loan.

Sources previously told Prospect News that the second-lien debt was pre-sold.

Macquarie Capital (USA) Inc. is leading the deal that will be with up to $328.9 million of equity used to fund the buyout of the company by Siris Capital Group LLC for $26.00 per share in cash, or about $840 million.

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

Digital River is a Minneapolis-based provider of global ecommerce, payments and marketing services.

Advisory Board details

Advisory Board said in a recent filing with the Securities and Exchange Commission that its $775 million senior secured credit facility is expected to include a $50 million five-year revolver anticipated at Libor plus 350 basis points, and a $725 million seven-year covenant-light term loan expected at Libor plus 400 bps.

The filing also disclosed that the term loan will have 101 soft call protection for one year.

J.P. Morgan and Bank of America Merrill Lynch are leading the deal that will be used with about $65 million of cash on hand to help fund the acquisition of Royall & Co. and replace an existing $150 million revolver.

Under the agreement, Royall is being bought for $850 million, consisting of $750 million in cash and $100 million of Advisory Board stock.

Leverage is expected to be about 4.9 times debt to last 12 month adjusted EBITDA.

Closing is targeted for January, subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other customary conditions.

Advisory Board is a Washington, D.C.-based technology, research and services provider. Royall is a Richmond, Va.-based data-driven student engagement and enrollment management services company.

IPC, Dynacast being acquired

Meanwhile, Dynacast is planning debt financing led by J.P. Morgan Securities LLC, Barclays and Macquarie Capital to help fund its $1.1 billion buyout by Partners Group, which is expected to close in February, subject to regulatory approvals and customary conditions.

And, IPC is planning debt financing led by Barclays and Credit Suisse Securities (USA) LLC to help fund its buyout by Centerbridge Partners LP from Silver Lake Partners for about $1.2 billion, which is targeted to close in January, subject to customary conditions and approvals.

Details on the structure of both companies’ new debt deals are not yet available.

Dynacast is a Charlotte, N.C.-based manufacturer of small, highly complex metal components. IPC is a Jersey City, N.J.-based provider of mission-critical network services and trading communication technology to the financial markets community.

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