Reynolds reworks new loan, amendment; Vertafore add-on breaks; Insight Global talk emerges

By Sara Rosenberg

New York, July 18 - Reynolds Group made a number of changes to its new term loan and concurrent amendment request on Monday, including adding call protection, revising the delayed-draw ticking fee as well as offering existing lenders an amendment fee.

And with word of the revisions, Reynolds' existing term loan was seen trading lower by some in the secondary market, while others were marking the paper as unchanged.

Also in trading, Vertafore Inc.'s term loan ad-on freed up, with levels quoted above its original issue discount price, and as the new debt emerged in the secondary, the existing term loan was a little softer.

Back over in the primary market, Insight Global Inc. released price talk on its term loan B as the deal was presented to lenders during the session, and Academy Sports + Outdoors nailed down timing on the launch of its credit facility.

Reynolds tweaks deal

Reynolds Group announced a bunch of changes to its new $2 billion senior secured term loan due August 2018 (Ba3/BB-) and credit facility amendment proposal, but left price talk unchanged along with the July 25 commitment deadline, according to a market source.

Under the revisions, the company is now offering two years of 101 soft call protection on the new term loan, and there will be 101 soft call protection for one year on the existing term loan, the source said.

Also, the delayed-draw fee on the new term loan will now be the full spread for 90 days from closing, whereas before, lenders were being offered half the spread for 30 days and the full spread thereafter, the source continued.

As before, price talk on the new term loan is Libor plus 525 bps with a 1.25% Libor floor and an original issue discount of 99, and the existing term loan due February 2018 is being repriced at Libor plus 525 bps with a 1.25% Libor floor from Libor plus 325 bps with a 1% floor currently.

Reynolds adds consent fee

Another modification made to the Reynolds transaction is the addition of a 5 bps amendment fee for existing lenders, compared to no fee under the original proposal, the source remarked.

Also, the company's new and existing term loans will now share $200 million of additional annual amortization during the period that the intercompany loan between Reynolds and Graham Packaging Co. Inc. is outstanding and Graham is a non-guarantor on Reynolds' loans.

Furthermore, the company eliminated its amendment request to allow additional acquired businesses to be non-guarantors going forward.

Credit Suisse Securities (USA) LLC and HSBC Securities (USA) Inc. are the lead banks on the deal.

Pro forma for the deal, net senior secured leverage is 3.5 times and net total leverage is 6.0 times.

Reynolds flat to down

As news of the changes hit the market, Reynolds' existing term loan E was quoted by one trader at 99 bid, 99½ offered, down from 99¼ bid, 99¾ offered, and by a second trader at 99 1/8 bid, 99 5/8 offered, down from 99¼ bid, 99¾ offered. A third trader, however, was seeing it at 99 bid, 99½ offered, unchanged on the day.

Proceeds from the new term loan, $1.5 billion of senior secured debt, $500 million of senior unsecured debt and cash on hand will be used to fund the purchase of Graham for $25.50 per share, or a total of about $4.5 billion, including assumed debt.

Closing is expected in the second half of this year, subject to customary regulatory approvals and conditions, including the approval of Graham's stockholders.

Reynolds is an Auckland, New Zealand-based manufacturer and supplier of consumer food and beverage packaging and storage products. Graham is a York, Pa.-based supplier of plastic containers.

Vertafore add-on trades

Vertafore's $75 million add-on term loan (B+) made its way into the secondary on Monday, with levels quoted at 99½ bid, par ¼ offered, according to a trader. The add-on and the existing term loan trade together. On Friday, the existing loan was a little higher at par bid, par ½ offered, the trader remarked.

Pricing on the add-on and the existing term loan is Libor plus 375 bps with a 1.5% Libor floor, and all of the debt includes 101 soft call protection for one year. The add-on was sold at an original issue discount of 98½ after tightening from 98 during syndication. When the existing loan was obtained early this year, it was sold at par.

Credit Suisse Securities (USA) LLC and Bank of America Merrill Lynch are the lead banks on the deal that will be used to fund an acquisition.

Vertafore is a Bothell, Wash.-based provider of software and information to the insurance distribution channel.

Insight Global sets talk

Returning to primary happenings, Insight Global held a bank meeting on Monday to kick off syndication on its credit facility, and in connection with the event, price talk on the $157 million term loan B was announced, according to a market source.

The B loan is being talked at Libor plus 500 bps with a 1.5% Libor floor, the source said, adding that the new money is being offered at an original issue discount of 991/2.

The company's $177 million credit facility (B1/B+) also includes a $20 million revolver.

BNP Paribas Securities Corp. is the lead bank on the deal that will be used to refinance senior and mezzanine debt.

Pro forma leverage at the Atlanta-based Information Technology employment firm is 2.95 times.

Academy Sports sets launch

Academy Sports firmed up timing on its $1.49 billion credit facility with the scheduling of a bank meeting for 1:30 p.m. ET on Tuesday, according to a market source.

As was previously reported, the facility is comprised of an $840 million covenant-light term loan (B) and a $650 million asset-based revolver.

Morgan Stanley & Co. Inc., Credit Suisse Securities (USA) LLC, Barclays Capital Inc., Goldman Sachs & Co., Mizuho Securities USA Inc. and KKR Financial are leading the term loan.

Meanwhile, the revolver is being led by J.P. Morgan Securities LLC, Morgan Stanley & Co. Inc., Credit Suisse Securities (USA) LLC, Barclays Capital Inc., Goldman Sachs & Co., Mizuho Securities USA Inc. and KKR Financial.

Academy funding buyout

Proceeds from Academy Sport's credit facility will be used to help fund the acquisition of the company by Kohlberg Kravis Roberts & Co.

Financial terms of the deal have not been disclosed.

Other funds for the transaction will come from $450 million of high-yield bonds.

When the buyout was announced at the end of May, it was said that closing was expected in six to eight weeks, subject to customary conditions.

Academy Sports is a Katy, Texas-based chain of sporting goods and outdoor stores.

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