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

By Sara Rosenberg

New York, April 16 – Rocket Software Inc. upsized on Tuesday afternoon its U.S. term loan B due November 2028 to $880 million from $735 million and its euro term loan B due November 2028 to €300 million from €250 million, according to a market source.

The $735 million and €250 million sizes on the tranches had come out on Tuesday morning as the debt had initially launched as a $1 billion equivalent U.S. and euro term loan B with tranche sizes to be determined.

Also, the original issue discount on the U.S. term loan was changed to 99 in the afternoon from revised talk in the morning of 98.63 and initial talk of 98.5, the source said.

In addition, the U.S. term loan was revised in the morning 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.

Furthermore, in the morning, 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 for the U.S. term loan were scheduled to be due at 1:15 p.m. ET on Tuesday, the source added.

Proceeds will be used with $800 million of senior secured notes, downsized from $1 billion, 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 $2.28 billion and the euro term loan B will total €875 million.

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

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