Rocket Software sets U.S. and euro term loan sizes, tightens U.S. OID

By Sara Rosenberg

New York, April 16 – Rocket Software Inc. set the size of its U.S. term loan B due November 2028 at $735 million and the size of its euro term loan B due November 2028 at €250 million, versus talk at launch of a $1 billion equivalent U.S. and euro term loan B with tranche sizes to be determined, according to a market source.

In addition, the U.S. term loan was revised to fungible with the existing U.S. term loan from non-fungible. The euro term loan is fungible with the company’s existing euro term loan and has been since launch.

Also, the original issue discount on the U.S. term loan was changed to 98.63 from 98.5, the source said.

Furthermore, portability was removed from both term loans, compared to talk at launch of portability subject to a closing total net leverage ratio, the buyer must be either a private equity fund with at least $1 billion in AUM or a strategic, and if private equity then need minimum ratings of B3/B-, and if strategic then need minimum ratings of Ba3/BB-.

The U.S. term loan is still priced at SOFR plus 475 basis points with a 0.5% floor, the euro term loan is still priced at Euribor plus 475 bps with a 0% floor and a discount of 98.63, and both loans (B3/B-/BB-) still have 101 soft call protection for six months.

RBC Capital Markets, Barclays, Deutsche Bank Securities Inc., UBS Investment Bank, Citigroup Global Markets Inc., HSBC Securities (USA) Inc., Mizuho Securities USA Inc., SMBC and Goldman Sachs Bank USA are the joint lead arrangers on the deal.

Commitments continued to be due at noon ET on Tuesday, the source added.

Proceeds will be used with $1 billion of senior secured notes, new cash equity from Rocket Software’s existing shareholders and cash from the balance sheet to fund the acquisition of the Application Modernization and Connectivity business (AMC) of OpenText for $2.275 billion.

Closing is expected in the second quarter, subject to regulatory approvals and other customary conditions.

Pro forma for the transaction, the U.S. term loan B will total $2.14 billion and the euro term loan B will total €825 million.

Rocket Software, a portfolio company of Bain Capital, is a Waltham, Mass.-based provider of enterprise infrastructure software.

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