Knowlton Development, Apollo Infra Equity, Priority Payment Systems all widen pricing

By Sara Rosenberg

New York, Dec. 11 – In the primary market on Tuesday, Knowlton Development Corp. lifted pricing on its term loan and made a number of lender friendly documentation changes.

Additionally, Apollo Infra Equity US Holdco LLC increased the spread on its term loan B and widened the original issue discount.

And, Priority Payment Systems flexed pricing on its add-on term loan B and may end up deepening the issue price, although no official change has been made to the discount as of yet. The company also terminated plans to reprice its existing term loan B.

Knowlton reworked

Knowlton Development raised the spread on its $525 million seven-year first-lien term loan (B2/B+) to Libor plus 425 basis points from talk in the range of Libor plus 375 bps to 400 bps and left the 0% Libor floor and original issue discount of 99 unchanged, according to a market source.

Also, the company added that the 101 soft call protection for six months applies to repricings in connection with a dividend recapitalization, the MFN sunset was eliminated, the MFN exception amount was reduced to $52.6 million, the MFN maturity exception was extended to 24 months and the MFN excluded amount was eliminated.

In addition, asset sale sweep step-downs were removed, the unused general debt basket was restricted from being reallocated to the incremental freebie, the no worse than incurrence prong was limited to debt incurred in connection with an acquisition or similar investment, the inside maturity amount exception was limited to the greater of $26.3 million or 25% of LTM EBITDA, the ratio debt incurred by non-loan parties became subject to a cap, and the contribution debt basket was slashed to 100% from 200%, the source said.

Furthermore, unlimited investments became subject to 4.25 times first-lien net leverage, unlimited restricted payments became subject to 4 times first-lien net leverage, EBITDA add-backs were capped at 30% with a 24-month look-forward, and annual lender calls are now required.

Knowlton getting revolver

Along with the first-lien term loan, Knowlton Development will get a $75 million five-year revolver as part of its $600 million of credit facilities.

Commitments continued to be due at 5 p.m. ET on Tuesday, and allocations are targeted for later this week, the source added.

UBS Investment Bank, Guggenheim and Jefferies LLC are leading the deal that will be used to help fund the buyout of the company by Cornell Capital.

Originally, the company was also expected to get a $160 million second-lien term loan, but, prior to the bank meeting, that loan was replaced by equity as a result of oversubscription on the equity side.

Knowlton Development is a Quebec-based manufacturer of health and beauty-care products.

Apollo Infra revised

Apollo Infra Equity lifted pricing on its $275 million seven-year term loan B to Libor plus 450 bps from Libor plus 425 bps and adjusted the original issue discount to 99 from 99.5, a market source remarked.

The term loan B still has a 0% Libor floor and 101 soft call protection for six months.

The company’s $360 million of credit facilities (Ba2/BB) also include a $35 million revolver and a $50 million letter-of-credit facility.

Commitments are due at noon ET on Wednesday, the source added.

RBC Capital Markets, Goldman Sachs Bank USA and BMO Capital Markets are leading the deal that will help fund Apollo Global Management LLC’s acquisition of an about $1 billion portfolio, including assumed obligations, of predominantly equity investments in energy assets from GE Capital’s Energy Financial Services unit.

The equity portfolio is comprised of about 20 investments in renewable energy, contracted natural gas fired generation and midstream energy infrastructure assets, primarily in the United States.

Closing is expected this quarter, subject to customary conditions.

Priority Payment updated

Priority Payment Systems flexed pricing on its $130 million add-on term loan B to Libor plus 500 bps from Libor plus 475 bps and canceled plans to reprice its existing term loan B to Libor plus 475 bps from Libor plus 500 bps, according to market sources.

Original issue discount talk on the add-on term loan is still 99.5, but some investors have been asking for a wider discount, such as 99.25, sources said.

The add-on term loan has a 1% Libor floor.

Included in the add-on term loan is a $70 million delayed-draw tranche.

Commitments were due on Tuesday, and the deal likely won’t allocate until Friday at the earliest, sources added.

SunTrust Robinson Humphrey Inc. is leading the debt that will be used to fund acquisitions and repay revolver borrowings.

Priority Payment is an Alpharetta, Ga.-based payment technology company.

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