Forward Air lifts term loan to $1.13 billion, widens pricing

By Sara Rosenberg

New York, Sept. 22 – Forward Air Corp. (Clue Opco LLC) upsized its seven-year senior secured covenant-lite term loan B to $1.125 billion from $925 million, and increased pricing to SOFR plus 450 basis points from talk in the range of SOFR plus 375 bps to 400 bps, according to a market source.

In addition, the original issue discount on the term loan was revised to 96 from 98, the 101 soft call protection was extended to one year from six months, and the MFN was changed to 50 bps for life applicable to all pari passu term loans with no carve-outs from 50 bps for six months, subject to certain carveouts, the source said.

Regarding debt incurrence, the free and clear was changed to 50% of EBITDA from 100% of EBITDA, the incremental ratio test was revised to not exceed first-lien net leverage of 2.8x from closing date first-lien net leverage of 3.2x, the fixed charge coverage ratio test was removed and the acquisition debt no-worse prong was removed.

Furthermore, restricted payments was modified to a general basket of the greater of $165 million and 30% of EBITDA from the greater of $300 million and 55% of EBITDA, the starter basket was removed and the ability to grow the restricted payments baskets with declined proceeds was removed, the source continued.

Under investments, the general basket was changed to the greater of $165 million and 30% of EBITDA from the greater of $330 million and 60% of EBITDA, similar businesses was revised to the greater of $140 million and 25% of EBITDA from the greater of $330 million and 60% of EBITDA, a 25% of EBITDA shared cap on investments in/acquisitions of non-guarantor restricted subsidiaries was added, and liens for pari first-lien debt are 2.8x first-lien net leverage, revised from closing date 3.2x first-lien net leverage.

Furthermore, EBITDA was adjusted for an add-back cap of 20% total, inclusive of pro forma synergies, business optimization, and restructuring costs.

The term loan still has a 0.75% floor.

The company’s senior secured credit facilities (Ba3/BB-/BB) also include a $400 million five-year revolver.

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.

Recommitments were scheduled to be due at noon ET on Friday, 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 $725 million of senior secured notes, downsized from $925 million with the term loan upsizing, and cash on hand to 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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