Koppers tweaks deal, frees to trade; Archroma sets changes, breaks U.S. term loan

By Sara Rosenberg

New York, March 10 – Koppers Inc. raised pricing on its term loan B, modified the original issue discount and made some revisions to documentation, and then the debt made its way into the secondary market on Friday afternoon.

Also, before breaking for trading, Archroma finalized its U.S. and euro term loan B tranche sizes, resulting in a downsizing of the total amount of debt being obtained, increased pricing on the U.S. tranche, set the original issue discount on both tranches at the wide end of guidance and sweetened the call protection.

Koppers updated

Koppers lifted pricing on its $400 million seven-year covenant-lite term loan B (Ba3/BB-/BB+) to SOFR plus 400 basis points from talk in the range of SOFR plus 350 bps to 375 bps and changed the original issue discount to 97 from talk in the range of 97.5 to 98, a market source remarked.

Also, the 50 bps MFN was set for life, versus having a six-month sunset previously, and the 12 month maturity qualifier was removed, revolver and term loan B lender classes now have separate voting rights, and the excess cash flow sweep was adjusted to 50%, stepping down to 25% at less than 2.25x total net leverage and 0% at less than 1.75x total net leverage from 50%, stepping down to 25% at less than 2.75x total net leverage and 0% at less than 2.25x total net leverage, the source continued.

The term loan still has a 0.5% floor, CSA of 10 bps and 101 soft call protection for six months.

Koppers breaks

Recommitments for Kopper’s term loan B were due at 11 a.m. ET on Friday and the debt began trading in the afternoon, with levels quoted at 97½ bid, 98½ offered, another source added.

Wells Fargo Securities LLC, BofA Securities Inc., Fifth Third, PNC, Citizens and Truist are leading the deal that will be used with a revolver draw to refinance $500 million 6% senior notes due February 2025 and pay transaction related fees and expenses.

Koppers is a Pittsburgh-based provider of treated wood products, wood treatment chemicals and carbon compounds.

Archroma revised

Archroma firmed the size of its U.S term loan B (B2/B+) due June 2027 at $350 million and the size of its euro term loan B (B2/B+) due June 2027 at €455 million ($480 million equivalent), versus talk at launch of $850 million equivalent U.S. and euro term loan debt with tranche sizes to be determined, according to a market source.

In addition, pricing on the U.S. term loan was lifted to SOFR plus 550 bps from SOFR plus 525 bps and the one pricing step-down was removed, and, while pricing on the euro term loan remained at Euribor plus 550 bps, the tranche now has one pricing step-down instead of two, the source said.

Also, both term loans saw their original issue discount set at 95, the wide end of the 95 to 96 talk, and the extension of the 101 soft call protection to one year from six months.

As before, the U.S. term loan has a 0.5% floor and the euro term loan has a 0% floor.

JPMorgan Chase Bank is the sole physical bookrunner on the U.S. loan and HSBC is a passive bookrunner, and HSBC is the sole physical bookrunner on the euro loan and JPMorgan is a passive bookrunner. Other bookrunners include BofA Securities Inc. and UBS Investment Bank. HSBC is the administrative agent.

Archroma hits secondary

Commitments and consents for Archroma’s U.S. loan were due at 9:30 a.m. ET on Friday and for the euro loan were due at 7 a.m. ET on Friday, and the U.S. loan freed to trade during the session, with levels quoted at 95 bid, 96 offered, another source added.

The euro term loan will break for trading on Monday morning.

The term loans will be used to refinance/extend the company’s existing first-lien euro and U.S. term loan B borrowings due August 2024 and capital expenditures facility, and for general corporate purposes.

SK Capital is the sponsor.

Archroma is a Switzerland-based provider of specialty chemicals and solutions for the textiles, packaging & paper, paints and coatings markets.

Fund flows

In other news, actively managed loan fund flows on Thursday were negative $30 million and loan ETFs were positive $10 million, market sources said.

Loan funds reported weekly outflows totaling $239 million, including positive $103 million ETFs. These were the lightest withdrawals in eight weeks.

Leveraged loan funds have reported 28 outflows in the last 29 weeks with actively managed funds enduring a forty fourth consecutive weekly withdrawal, sources continued.

Dedicated loan fund AUM is down to $101 billion from $142 billion in May 2022.

Outflows for loan funds in 2023 total $5.3 billion, compared to $12.8 billion of outflows in 2022, sources added.

Loan indices mixed

IHS Markit’s iBoxx loan indices were mixed on Thursday, with the Leveraged Loan indexes (MiLLi) closing out the day up 0.02% and the Liquid Leveraged Loan indices (LLLi) closing out the day unchanged.

Month to date, the MiLLi is up 0.22% and year to date it is up 3.42%, and the LLLi is up 0.4% month to date and up 3.33% year to date.

Average secondary market bids in the U.S. on Thursday were 91.88, up 0.04% from the previous day and down 0.01% year to date.

According to the IHS Markit data, some of the top advancers on Thursday were Advantage Sales/Advantage Solutions’ October 2021 covenant-lite term loan at 87.75, up from 84.75, Revlon’s November 2020 additional covenant-lite term loan B2 at 54.19, up from 52.91, and Weight Watchers’ April 2021 covenant-lite term loan B at 60.17, up from 58.83.

Some top decliners on Thursday were Instant Brands’ April 2021 covenant-lite term loan at 43.33, down from 50.88, CenturyLink/Lumen’s January 2020 covenant-lite term loan B at 74.25, down from 79.25, and Monitronics’ August 2019 takeback term loan at 36.5, down from 37.75.

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