First American Payment reworks first- and second-lien term loans

By Sara Rosenberg

New York, Dec. 30 – First American Payment Systems LP upsized its seven-year first-lien term loan B to $240 million from $230 million and downsized its second-lien term loan to $80 million from $100 million, according to a market source.

Also, pricing on the first-lien term loan B was increased to Libor plus 575 basis points from talk of Libor plus 500 bps to 525 bps, and pricing on the second-lien term loan was lifted to Libor plus 1,050 bps from talk of Libor plus 950 bps to 975 bps, the source said.

In addition, original issue discount talk on the first-lien term loan B was revised to a range of 98.5 to 99 from initial talk of 99, and the discount on the second-lien term loan widened to 97 from 98, the source continued.

Furthermore, the 101 soft call protection on the first-lien term loan B was extended to one year from six months, the call protection on the second-lien loan was changed to non-callable for one year, then at 104 in year two and 102 in year three from 102 in year one and 101 in year two, and the maturity on the second-lien loan was shortened to 7.5 years from eight years.

The term loans still have a 1% Libor floor.

Other changes included setting the total net leverage covenant under the first-lien term loan B at 6.75 times on March 31, 2017 stepping down to 3.5 times by March 31, 2021, from starting at 7.25 times on Dec. 31, 2016 stepping down to 4.5 times by March 31, 2020, and placing a $7.5 million cap, except for cash subject to control agreements, on leverage ratio cash net, from no cap previously.

And, the 18-month MFN sunset was removed, the incremental allowance was revised, the excess cash flow sweep was increased to start at 75% from 50% and the total net leverage needed for the step-downs was modified, and there were changes to restricted payments, investments/junior payments, the investment/acquisition basket, the asset sale provision and the EBITDA definition.

The total net leverage covenant under the second-lien term loan remained set at 0.5 times wider than first-lien levels.

Goldman Sachs Bank USA and SunTrust Robinson Humphrey Inc. are the lead banks on the deal.

Proceeds will be used to refinance existing debt.

With the changes to the term loan sizes, the company is getting $14 million in additional sponsor equity, compared to no additional equity previously, the source added.

First American Payment Systems is a Fort Worth, Texas-based payments platform serving small- and medium-sized businesses.

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