Epicor term loan strengthens with buyout news; Arbor Pharmaceuticals outlines term B changes

By Sara Rosenberg

New York, July 5 – Epicor Software Corp.’s term loan gained some ground in the secondary market on Tuesday after the company announced that it is being acquired by KKR, and AdvancePierre Foods Inc.’s first-lien term loan was better, likely helped more by the improved market tone than by paydown news.

Meanwhile, in the primary market, Arbor Pharmaceuticals LLC lifted pricing on its term loan B, widened original issue discount, extended the call protection and made a number of documentation changes.

Epicor rises

Epicor Software’s term loan was strong in trading on Tuesday with news that KKR is purchasing the company from Apax Partners, according to a trader.

The term loan was quoted at 99 bid, 99¾ offered, up from 98¼ bid, 99 offered, the trader said.

Closing on the buyout is expected by the end of August, subject to customary conditions, including regulatory approval.

Financial terms of the transaction were not disclosed.

Morgan Stanley & Co. LLC and RBC Capital Markets served as financial advisors to KKR on the transaction, and BofA Merrill Lynch and UBS Investment Bank served as financial advisors to Epicor.

The company’s existing credit agreement has “pre-cap language” that would allow the debt to remain in place following the change of control, another source remarked. This gives Epicor the option to avoid a refinancing of the existing debt with the buyout by KKR.

Epicor is an Austin, Texas-based provider of enterprise business software services.

AdvancePierre advances

AdvancePierre Foods’ term loan moved to 100 1/8 bid, 100 5/8 offered from par bid, 100½ offered, a trader said, explaining that the debt was mostly just affected by the better feel in the general secondary market.

The company announced in the morning plans to repay a portion of the first-lien term loan using proceeds from an initial public offering of common stock.

It is estimated that about $238.4 million in gross proceeds will be received by AdvancePierre as a result of the stock offering, based on the assumed initial public offering price of $21.50 per share, the midpoint of the estimated offering price range outlined on the cover of the prospectus. After deductions, net proceeds from the offering are estimated at around $209.5 million.

As of June 2, the company had $1.3 billion outstanding under its first-lien term loan.

AdvancePierre is a Blue Ash, Ohio-based producer and distributor of value-added, convenient, ready-to-eat sandwiches, sandwich components and other entrees and snacks.

Arbor reworks deal

Switching to the primary market, Arbor Pharmaceuticals raised pricing on its $500 million seven-year covenant-light term loan B to Libor plus 500 basis points from talk of Libor plus 425 bps to 450 bps, revised original issue discount talk to 94 to 95 from 99 and extended the 101 soft call protection to one year from six months, according to a market source.

Also, documentation changes were outlined including setting amortization at 2.5% in years one and two and 5% thereafter, outlining that the debt now has 50 bps MFN for life, revising the accordion to $150 million plus unlimited amounts subject to 3.25 times first-lien leverage and providing for unlimited debt incurrence up to 6 times total leverage, the source said.

Furthermore, the excess cash flow sweep was changed to 75%, with step-downs to 50% at first-lien leverage of 2 times, 25% at 1.75 times first-lien leverage and 0% at 1.5 times first-lien leverage, the available amount starter basket was modified to $50 million with no grower, mandatory prepayments were revised to 100% of asset sale proceeds with no step and the reinvestment period for asset sale proceeds was reduced.

As before, the term loan B has a 1% Libor floor.

Arbor getting revolver

Along with the term loan B, Arbor Pharmaceuticals’ $575 million credit facility (B1/BB-) provides for a $75 million five-year revolver.

Commitments are due at the close of business on Monday, the source added. At launch, the commitment deadline had initially been set at noon ET on June 29.

Deutsche Bank Securities Inc., Barclays, Citigroup Global Markets Inc., Goldman Sachs & Co., RBC Capital Markets, Mizuho and KKR Capital Markets are leading the deal that will be used to help fund the acquisition of XenoPort Inc. for $7.03 per share in cash, or a total equity value of about $467 million.

Closing is expected in the third quarter, subject to certain customary conditions.

Arbor Pharmaceuticals is an Atlanta-based pharmaceutical company currently focused on the cardiovascular, hospital and pediatric markets. XenoPort is a Santa Clara, Calif.-based biopharmaceutical company.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.