Forward Air launches $925 million term loan at SOFR plus 375-400 bps

By Sara Rosenberg

New York, Sept. 11 – Forward Air Corp. (Clue Opco LLC) launched on Monday its $925 million seven-year senior secured covenant-lite term loan B with price talk of SOFR plus 375 basis points to 400 bps with a 0.75% floor and an original issue discount of 98, according to a market source.

The term loan has 101 soft call protection for six months, amortization of 1% per annum and MFN of 50 bps for six months, subject to certain carveouts, the source said.

Mandatory prepayments are from 50% of excess cash flows, stepping down to 25% and 0% at 0.5x and 1x inside closing date total net leverage, respectively; 100% of net proceeds of non-ordinary course asset sales and casualty events; and 100% of net proceeds from the incurrence of non-permitted debt.

Incremental facilities are not to exceed the greater of 100% of the borrower’s LTM consolidated adjusted EBITDA; and a fixed dollar amount equal to 100% of the borrower’s LTM consolidated adjusted EBITDA as of the closing date, less the aggregate principal amount of incremental equivalent debt incurred in reliance on this clause, plus pari passu debt so long as the borrower’s first-lien net leverage ratio does not exceed such ratio on the closing date, junior lien debt so long as the borrower’s secured net leverage ratio does not exceed such ratio on the closing date and unsecured debt so long as the borrower’s total net leverage ratio does not exceed such ratio on the closing date, plus the aggregate principal amounts of voluntary prepayments and commitment reductions of pari passu debt not funded with long term debt, the source continued.

Security is a perfected first priority lien on substantially all tangible and intangible assets of, including the equity interests of each wholly owned direct subsidiary held by, the borrower and the guarantors, subject to customary and appropriate exceptions.

Expected term loan ratings are Ba3/BB-/BB-.

Citigroup Global Markets Inc., Morgan Stanley Senior Funding Inc., Goldman Sachs Bank USA, JPMorgan Chase Bank, US Bank, PNC Capital Markets, Capital One, Citizens Bank, Deutsche Bank Securities Inc. and TD Securities (USA) LLC are the lead arrangers on the deal. Citi is the agent.

Commitments are due at 5 p.m. ET on Sept. 20, the source added.

Proceeds will be used to support the acquisition of Omni Logistics LLC from Ridgemont Equity Partners and EVE Partners LLC.

Under the agreement, Omni shareholders will receive $150 million in cash and Forward common stock and perpetual non-voting convertible preferred stock. At the closing of the transaction, Omni shareholders will own 37.7% of the combined company on a fully diluted, as-converted basis.

The new term loan will be used with cash on hand to help refinance existing debt at both companies and to pay the consideration and other amounts in connection with the transaction.

Closing is expected this year, subject to the receipt of regulatory approvals and other customary conditions.

Forward Air is a Greeneville, Tenn.-based provider of transportation services. Omni is a Dallas-based logistics and supply chain management company.

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