Elo Touch Solutions removes pricing grid, revises documentation, breaks for trading

By Sara Rosenberg

New York, Dec. 7 – Elo Touch Solutions eliminated the pricing step-downs from its term loan and made changes to the MFN, incremental and EBITDA definition before breaking for trading on Friday above its original issue discount price.

Elo Touch removed the 25 basis points pricing step-downs from its $360 million seven-year covenant-light first-lien term loan (B2/B+) that would have taken effect at first-lien net leverage of 0.5 times and 1 times inside closing date levels, according to a market source.

Furthermore, MFN was set at 50 bps for life and all carve-outs were removed, versus prior talk of 50 bps with a six month sunset and carve-outs.

Also, the incremental was adjusted to the greater of $75 million free and clear and 75% EBITDA, plus an unlimited amount subject to closing date first-lien net leverage, from $93 million and 100% EBITDA, the source said.

And, the EBITDA definition was changed to include a 20% cap on pro forma run rate cost savings within 12 months from uncapped within 24 months.

Elo pricing terms

Pricing on Elo Touch’s term loan remained at Libor plus 650 bps with a 0% Libor floor and an original issue discount of 95.

The debt has soft call protection of 102 in year one and 101 in year two and amortization of 5% per annum.

Previously in syndication, the discount on the term loan was revised from talk in the range of 97 to 98, the soft call protection was changed from 101 for one year, amortization was increased from 1% per annum, and the excess cash flow sweep was modified to 75% with step-downs.

The excess cash flow sweep will step to 50% at 3.35 times first-lien net leverage, 25% at 2.85 times and 0% at 2.35 times. Initially, the sweep was talked at 50%, with step-downs to 25% at 3.25 times first-lien net leverage and 0% at 2.75 times.

Elo hits secondary

Commitments were due for Elo Touch’s term loan at noon ET on Friday, and the debt freed up for trading not too long thereafter, with levels quoted at 95¾ bid, 96¾ offered, another source added.

Goldman Sachs Bank USA, Citizens Bank and MidCap Financial are leading the deal.

Proceeds will be used to help fund the buyout of the company by Crestview Partners from the Gores Group.

Closing is expected this quarter, subject to customary conditions.

Elo Touch is a Milpitas, Calif.-based information and communications technology services and solutions provider.

Inspire Brands closes

In other news, Inspire Brands (IRB Holding Corp.) announced in a news release that it completed the acquisition of Sonic Corp. for $43.50 per share, or about $2.3 billion, including the assumption of Sonic’s net debt.

To help fund the transaction, Inspire Brands got a fungible $1,025,000,000 incremental first-lien term loan B (B2/B) due Feb. 5, 2025 priced at Libor plus 325 bps with a 25 bps step-down at 2.5 times first-lien net leverage and a 1% Libor floor, and sold at an original issue discount of 99.75. The debt has 101 soft call protection for six months.

Barclays, Bank of America Merrill Lynch, Credit Suisse Securities (USA) LLC, Morgan Stanley Senior Funding Inc., Wells Fargo Securities LLC and KeyBanc Capital Markets led the deal.

Pro forma first-lien net leverage is 3.4 times.

Inspire, a Roark Capital Group portfolio company, is an Atlanta-based multi-brand restaurant company. Sonic is an Oklahoma City-based drive-in restaurant chain.

Forest transaction completed

The acquisition of Forest City Enterprises LP by Brookfield Asset Management Inc. for $25.35 per share in an all-cash transaction valued at $11.4 billion, including debt, has closed, a news release said.

To help fund the transaction, Forest City got a new $1.25 billion seven-year covenant-light term loan B (B2/B+) priced at Libor plus 400 bps with a 0% Libor floor. The debt was sold at an original issue discount of 99.75 and has 101 soft call protection for six months.

During syndication, pricing on the loan firmed at the high end of the Libor plus 375 bps to 400 bps talk and the discount was changed from 99.5.

Bank of America Merrill Lynch, TD Securities (USA) LLC, Barclays, BMO Capital Markets, CIBC, Citigroup Global Markets Inc., Deutsche Bank Securities Inc., RBC Capital Markets, Bank of Nova Scotia and US Bank led the deal.

Forest City is a Cleveland-based real estate company.

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