Research Now updates first- and second-lien term loan pricing

By Sara Rosenberg

New York, Dec. 8 – Research Now/Survey Sampling set pricing on its $700 million seven-year first-lien term loan (B1/B+) at Libor plus 550 basis points, the high end of revised talk of Libor plus 525 bps to 550 bps and up from initial talk in the range of Libor plus 450 bps to 475 bps, according to a market source.

Also, the original issue discount on the company’s $250 million eight-year second-lien term loan (Caa1/B-) firmed at 93, the wide end of revised talk in the range of 93 to 94 and wide of initial talk of 98.5, the source said.

As before, the first-lien term loan has a 1% Libor floor, an original issue discount of 95 and 101 hard call protection for one year.

Pricing on the second-lien term loan remained at Libor plus 950 bps with a 1% Libor floor and the debt is still non-callable for one year, then at 102 in year two and 101 in year three.

Earlier in syndication, the discount on the first-lien term loan was changed from 99 while the call protection was revised from a 101 soft call for six months, and pricing on the second-lien term loan was lifted from talk in the range of Libor plus 850 bps to 875 bps while the call protection was sweetened from 102 in year one and 101 in year two.

Furthermore, the incremental was changed to add a market terms governor to be determined in the reasonable judgment of the administrative agent versus as determined in good faith by the borrowers. The incremental allows for a $125 million first-lien starter with no grower.

Previously, the incremental was revised from a $200 million first-lien starter with an EBITDA grower, the six-month MFN sunset and all carve-outs were removed, all incremental ratios were set at subject to 0.25 times inside of closing date leverage, instead of all incremental ratios being set at closing date net leverage or no worse than, and all “no worse than” prongs for the first- and second-lien were removed.

In addition, the excess cash flow sweep was changed to 75% in year one regardless of leverage, with step-downs to 50%, 25% and 0% at 0.5 times, 1 times and 1.5 times inside closing total net leverage starting in year two, the source continued.

Earlier, the excess cash flow sweep was talked at 75% with step downs to 50%, 25% and 0% and before that it was talked at 50% with step downs to 25% and 0% at 0.5 times and 0.75 times inside closing total net leverage. Also, the company previously removed carry forward of voluntary prepayments and buybacks of loans.

Available amount was changed to $12.5 million started with no grower from revised talk of $25 million starter with no grower and initial talk of $25 million starter with an EBITDA grower.

In addition, on Friday it was announced that EBITDA add-back for sponsor management fees are capped at $5 million per annum plus 1.5% of the value of future transactions, the capital lease basket was reduced by $5 million, the working capital facilities under indebtedness was reduced by $5 million, permitted acquisitions are subject to no event of default as opposed to specified event of default standard, amendments to the pro rata sharing provisions are subject to an effective lender vote rather than a majority, amendments to the affected class provision are subject to 100% vote rather than majority vote, the ability to pay sponsor management fees are subject to no event of default versus no specified event of default and capped at $5 million per year plus 1.5% of future transactions, and quarterly lender calls are required, the source added.

Changes made earlier in the syndication process included revising the EBITDA definition to include addbacks to 18 months with a 20% cap on synergies/cost savings not related to the transaction from addback for 24 months, uncapped, and restricted payments and junior debt payments were adjusted to unlimited subject to 1.75 times inside closing date total net leverage from unlimited subject to 1 times inside closing date total net leverage.

Also earlier in syndication, investments were revised to unlimited subject to 1.5 times inside closing date total net leverage from unlimited subject to 0.75 times inside closing date total net leverage, and the ability to reclassify debt and liens was removed.

Goldman Sachs Bank USA, Bank of America Merrill Lynch, Jefferies LLC and Citizens Bank are the leads on the $950 million in senior secured term loans.

Proceeds will be used to help fund the merger of Research Now and Survey Sampling International and fund a $180 million dividend, reduced earlier from $191 million. The combined company will be privately held, with Court Square Capital Partners and HGGC, the current majority owners of Research Now and Survey Sampling, respectively, remaining as majority owners of the combined business.

Closing is expected by the end of the year, after the standard regulatory review process.

Research Now and Survey Sampling are providers of digital data solutions and technology for consumer and business-to-business survey research.

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