RCS Capital sets talk on first- and second-lien term loans with launch

By Sara Rosenberg

New York, March 3 - RCS Capital Corp. came out with price talk on its $550 million five-year first-lien term loan (B2/B+) and $150 million seven-year second-lien term loan (Caa1/B-) with its Wednesday bank meeting, according to a market source.

The first-lien term loan is talked at Libor plus 500 basis points to 550 bps with a 1% Libor floor and an original issue discount of 98½ to 99, and the second-lien term loan is talked at Libor plus 950 bps to 975 bps with a 1% Libor floor and a discount of 98, the source said.

Included in the first-lien term loan is soft call protection of 102 in year one and 101 in year two, and the second-lien loan is non-callable for two years, then at 103 in year three and 101 in year four.

Amortization on the first-lien term loan is 5% per annum.

Financial covenants include a maximum total leverage ratio, a minimum fixed charge coverage ratio and minimum regulatory capital.

The company's $725 million senior secured credit facility also provides for a $25 million three-year revolver (B2/B+) that will be undrawn at closing.

Commitments are due at noon ET on March 18, the source added.

Barclays and Bank of America Merrill Lynch are the bookrunners on the deal.

Proceeds will be used to help fund the acquisition of Cetera Financial Group from Lightyear Capital for $1.15 billion and to refinance Cetera debt.

Other funds for the transaction will come from equity from Luxor Capital Group and cash on hand.

Closing is expected in the second quarter, subject to Finra approval and other customary conditions.

Leverage through the first-lien is 2.1 times, leverage through the bank facility is 2.7 times, total leverage is 3.1 times, and net leverage is 3 times.

RCS is a New York-based holding company that operates and grows businesses focused on the financial services industry. Cetera is an El Segundo, Calif.-based financial services holding company that provides independent broker-dealer services and investment advisory services.

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