Oregon Clean Energy, Belfor free to trade; XPO loan softens; Hornblower joins calendar

By Sara Rosenberg

New York, Feb. 15 – Oregon Clean Energy LLC’s credit facilities began trading on Friday, with the first-lien term loan quoted above its original issue discount, and Belfor’s bank debt made its way into the secondary market as well.

Also in trading, XPO Logistics Inc.’s term loan was weaker following the release of disappointing fourth quarter numbers, adjusted 2019 guidance and the disclosure that a large customer has reduced its business with the company.

Meanwhile, in the primary market, Hornblower Holdings surfaced with incremental term loan plans.

Oregon Clean breaks

Oregon Clean Energy’s credit facilities freed to trade on Friday, with the $530 million seven-year first-lien term loan quoted at 99¼ bid, par offered, according to a market source.

Pricing on the term loan is Libor plus 375 basis points with a 1% Libor floor and it was sold at an original issue discount of 99. The debt has 101 soft call protection for six months.

On Thursday, the term loan was upsized $500 million and pricing was trimmed from Libor plus 400 bps.

The company’s $580 million of credit facilities (Ba3/BB-) also include a $50 million revolver.

Credit Suisse Securities (USA) LLC, Barclays and ICBC are leading the deal that will be used to refinance existing debt and fund a shareholder distribution, which was increased with the recent term loan upsizing.

Oregon Clean Energy is an 870 MW combined cycle natural gas-fired generation facility located in Oregon, Ohio.

Belfor hits secondary

Belfor’s credit facilities broke for trading too, with the $585 million seven-year first-lien term loan (Ba3/B) quoted at 99¾ bid, 100½ offered, a trader remarked.

Pricing on the first-lien term loan is Libor plus 400 bps with a 25 bps step-down at 4.5 times net total leverage and a 0% Libor floor. The debt was sold at an original issue discount of 99.5 and has 101 soft call protection for six months.

On Thursday, pricing on the first-lien term loan firmed at the low end of the Libor plus 400 bps to 425 bps talk, the step-down was added and the discount was tightened from 99.

The company’s $935 million of credit facilities also include a $200 million revolver (Ba3/B) and a $150 million second-lien term loan.

J.P. Morgan Securities LLC is leading the deal that will be used to help fund the buyout of the company by American Securities.

Belfor is a Birmingham, Mich.-based disaster recovery and property restoration company.

XPO retreats

XPO Logistics, a Greenwich, Conn.-based provider of supply chain solutions, saw its term loan head lower in the secondary market after fourth quarter results were announced, according to a market source.

The term loan was quoted at 97¾ bid, 98¾ offered on Friday, down from 98¾ bid, 99 1/8 offered pre-numbers release on Thursday. Earnings were announced late Thursday.

For the fourth quarter, net income was $84 million, or $0.62 per diluted share, compared with $189 million, or $1.42 per diluted share, for the same period in 2017.

Revenue for the quarter was $4.39 billion, versus $4.19 billion in the prior year’s fourth quarter, and adjusted EBITDA was $380 million, compared with $337 million for the 2017 quarter.

For full-year 2018, revenue was $17.28 billion, up from $15.38 billion for 2017, net income was $390 million, or $2.88 per diluted share, compared to $312 million, or $2.45 per diluted share in the prior year, and adjusted EBITDA was $1.56 billion, compared with $1.37 billion for 2017.

XPO revises guidance

Along with the earnings news, XPO modified its adjusted EBITDA guidance for full-year 2019 to a range of $1.65 billion to $1,725,000,000, an increase of 6% to 10% year-over-year, versus the prior target of 12% to 15%.

The company also reduced its expected full-year 2019 free cash flow target to a range of $525 million to $625 million, from a previous estimate of about $650 million, and cash taxes for 2019 are being guided in the range of $165 million to $190 million.

The company’s 2019 targets for free cash flow and cash taxes assume a cash interest expense of $275 million to $315 million based on additional debt of $1 billion in 2019 to repurchase shares.

“For the full year, we delivered 12.3% revenue growth, 9.3% organic growth and $1.56 billion of adjusted EBITDA – up 14.3% over 2017. However, we missed our fourth quarter forecast for adjusted EBITDA, primarily due to headwinds in France and the UK and a loss of profit in the postal injection business with our largest customer,” said Bradley Jacobs, chairman and chief executive officer of XPO Logistics, in a news release.

“We expect that our adjusted EBITDA growth this year will be in the range of 6% to 10%. This anticipates the impact of our largest customer substantially downsizing its business portfolio with us starting in the first quarter, as well as our more cautious view of Europe,” Jacobs added.

Hornblower on deck

Switching to the primary market, Hornblower Holdings set a bank meeting for 2:30 p.m. ET in New York on Thursday to launch a $300 million incremental term loan, a market source said.

UBS Investment Bank and Barclays are leading the deal that will be used to fund the acquisition of Entertainment Cruises.

Hornblower is a San Francisco-based cruise and event company.

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