Dell launches pro rata tranches; NorthStar restructures term loan; loan funds see outflows

By Paul A. Harris

Portland, Ore., Jan. 27 – Bank loans were unchanged on very low volume as players were on the sidelines on Wednesday, according to a bank loan trader.

The recently minted GCP Applied Technologies Libor plus 450 basis point six-year covenant-light term loan B (Ba2/BB+) was continuing to turn in a stellar performance in the secondary market, according to the trader who added that the $275 million deal was a blowout.

GCP’s loan was 100 1/8 bid, 100 5/8 offered on Wednesday.

The deal, which has a 0.75% Libor floor, priced at 99.

Elsewhere, dedicated bank loan funds saw outflows of $100 million on Tuesday, the most recent session for which data was available at press time, according to a fund manager.

NorthStar restructures

NorthStar Asset Management Group Inc. (NSAM LP) restructured its $500 million seven-year senior secured term loan B (Ba2/BBB-) on Wednesday.

The deal now includes a financial maintenance covenant set at three-times gross total leverage.

Pricing remains unchanged at Libor plus 375 bps with a 0.75% Libor floor and an original issue discount of 98.5 to 99.

The 101 soft call protection is extended to 12 months from six months.

Other changes include a scaling back of the free and clear incremental facility to $190 million and the elimination of the 100% of the last 12 months consolidated EBITDA grower component.

The excess cash flow sweeps will be decreased.

And the share purchase restricted payments carve-out amount for 2016 through 2017 has been reduced to $100 million.

The most favored nation sunset provision was removed.

There was no update on the timing.

Morgan Stanley Senior Funding Inc. is the lead bank on the deal.

Proceeds will be used to fund the acquisition of a roughly 85% interest in the Townsend Group, a manager and adviser of real assets, for about $380 million and to refinance a short-term bridge facility.

The acquisition is expected to close early this year.

Dell unveils pro rata tranches

Dell Inc. launched the pro rata portions of its $20.5 billion senior secured credit facility to lenders at a bank meeting on Wednesday, according to a market source.

As reported, the facilities pro rata tranches include a $3 billion five-year revolver, a $3.5 billion three-year non-amortizing term loan A-1, a $3.5 billion five-year term loan A-2.

The $49 billion of debt financing that Dell is using to help fund its acquisition of EMC Corp. also includes an $8 billion seven-year term loan B and a $2.5 billion 364-day term cash flow facility.

Financing also included $25 billion of senior secured and senior unsecured notes backed by a commitment for a $16 billion senior secured bridge facility and a $9 billion senior unsecured bridge facility.

The company also has a commitment for a $2.5 billion margin bridge facility and a $1.5 billion VMware note bridge facility.

It is contemplated that at, prior to or shortly after the closing of the merger, a margin loan facility in an aggregate principal amount of up to $2.5 billion may be entered into by a special purpose vehicle in lieu of the margin bridge facility and a permanent financing solely secured by the VMware intercompany notes in an aggregate principal amount of up to $1.5 billion will be obtained in lieu of the VMware note bridge facility.

Other funds for the transaction will come from up to $4.25 billion in equity and cash on hand.

Under the agreement, EMC is being purchased, while VMware will be maintained as a publicly traded company. EMC shareholders will receive $24.05 per share in cash in addition to tracking stock linked to a portion of EMC’s economic interest in the VMware business. The total transaction value is about $67 billion.

Closing is expected in mid-2016.

MedAssets closes

Pamplona Capital Management announced in a Wednesday press release that it has completed the acquisition of MedAssets, Inc.

As reported, MedAssets priced its $1.13 billion 6.5-year first-lien covenant-light term loan (B2/B) at Libor plus 475 bps, the low end of the Libor plus 475 bps to 500 bps talk.

The company’s $1.73 billion senior secured credit facility also includes a $100 million five-year revolver (B2/B) and a $500 million seven-year second-lien covenant-light term loan (Caa2/CCC+).

Pricing on the second-lien term was Libor plus 950 bps with a 1% Libor floor and a discount of 97.

Barclays, Morgan Stanley Senior Funding Inc., Macquarie Capital (USA) Inc. and Golub Capital Markets LLC were the bookrunners on the deal.

The buyout of the company by Pamplona Capital Management for $31.35 per share represents a total enterprise value of about $2.7 billion for the acquisition.

Other funds for the transaction will come from about $1,238,000,000 in equity.

Pamplona has entered into a separate agreement with VHA-UHC Alliance NewCo Inc., a member-owned health care company, to divest MedAssets’ Spend and Clinical Resource Management segment to VHA-UHC Alliance following the completion of Pamplona’s acquisition of MedAssets.

Pamplona will combine MedAssets’ Revenue Cycle Management segment with Precyse, a Pamplona-owned company that provides health information management services, technology and education.

First-lien leverage is 4.5 times, and total leverage is 6.5 times.

MedAssets is an Alpharetta, Ga.-based health care performance improvement company.

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