McAfee Enterprise first-lien softens post-downgrade; Amynta steady; NEP allocates euro loan

By Sara Rosenberg

New York, Dec. 18 – McAfee Enterprise (Magenta Buyer LLC) saw its first-lien term loan soften in the secondary market on Monday following a downgrade of the company’s ratings by S&P Global Ratings, and Amynta’s term loan held steady in trading from recent break levels.

In more happenings, NEP allocated on Monday its euro term loan B, following allocations going out on its U.S. term loans on Friday.

McAfee Enterprise dips

McAfee Enterprise’s first-lien term loan dropped to 66˝ bid, 68˝ offered on Monday from 67 bid, 69 offered on Friday as the company’s ratings were cut by S&P, a trader remarked.

Late Friday, the company’s issuer credit and first-lien credit facility ratings were lowered to CCC+ from B-, and its second-lien term loan term loan rating was downgraded to CCC- from CCC. The outlook is stable.

S&P said that continued negative free operating cash flow generation, budget misses and elevated leverage drove the rating action. The rating agency anticipates McAfee Enterprise’s revenue will decline by 11% to 12% in fiscal year 2023, which will cause its S&P Global Ratings-adjusted leverage to rise to about 10x and its free operating cash flow to debt to weaken to about negative 4%.

Although the company is expected to improve its profitability in fiscal year 2024 due to benefits from aggressive cost cutting initiatives, such as headcount reductions, facility rationalization, and some cuts in customer support and marketing, S&P believes elevated interest expense and the continued decline in non-recurring revenue increases the risk that McAfee Enterprise will generate negative free operating cash flow for the year.

The stable outlook reflects that, despite negative free operating cash flow generation in 2023, the security software company maintains adequate liquidity and full access to its revolver, S&P added in the release.

Amynta holds steady

Amynta’s $1.062 billion term loan due February 2028 was quoted at par bid, par ˝ offered on Monday, in line with where it broke for trading on Friday, a market source said.

Pricing on the term loan is SOFR plus 425 basis points with a 0% floor and it was issued at par. The debt has 101 soft call protection for six months and 0 bps CSA.

During syndication, the term loan was upsized from $1.037 billion, and pricing firmed at the low end of revised talk of SOFR plus 425 bps to 450 bps and tighter than initial talk of SOFR plus 450 bps.

BofA Securities Inc. is the left lead on the deal that will be used to reprice an existing term loan down from SOFR+10 bps CSA plus 500 bps with a 0% floor, and the funds from the recent upsizing will be used for general corporate purposes.

Amynta is a New York-based insurance services company.

NEP allocates

NEP allocated on Monday its $519 million equivalent euro term loan B due Aug. 19, 2026 priced at Euribor plus 350 bps plus 150 bps accrued PIK interest with a 0% floor and a 150 bps upfront fee (PIK), according to market sources.

The company’s $1.062 billion term loan B due Aug. 19, 2026 priced at SOFR plus 325 bps plus 150 bps accrued PIK interest with a 0% floor and a 150 bps upfront fee (PIK), $123 million incremental term loan B due June 1, 2026 priced at SOFR plus 825 bps plus 150 bps accrued PIK interest with a 1% floor and a 200 bps upfront fee (PIK), and $209 million incremental term loan B due Aug. 19, 2026 priced at SOFR plus 400 bps plus 150 bps accrued PIK interest with a 0.5% floor and a 150 bps upfront fee (PIK), all allocated on Friday, sources continued.

All of the term loans (Caa1/B/B+) have a 200 bps exit fee (cash).

During syndication, the U.S. term loan B due Aug. 19, 2026 was downsized from $1.092 billion.

NEP U.S. loan levels

On Monday, NEP’s U.S. term loans were all quoted at 94 bid, 95˝ offered, after breaking at that level on Friday, another source added.

Barclays, JPMorgan Chase Bank, HSBC Securities, Macquarie Capital, MUFG, Mizuho and PNC are leading the debt. Barclays is the administrative agent.

The loans will be used to extend the maturities of the company’s existing first-lien term loans due 2025.

Closing is expected on Thursday, sources added.

The borrowers for the U.S. term loans are NEP Group Inc., NEP/NCP Holdco Inc. and NEP II Inc., and the borrower for the euro term loan is NEP Europe Finco BV.

Carlyle is the sponsor.

NEP is a Pittsburgh-based provider of outsourced live and broadcast production solutions.

Fund flows

In other news, actively managed loan fund flows on Friday were negative $85 million and loan ETFs were positive $130 million, sources said.

Year-to-date, outflows for loan funds total $17.6 billion, with positive $2.6 billion ETFs, sources added.

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