UFC rises on WWE merger news; Hamilton steady with incremental plans; Melissa & Doug pulled

By Sara Rosenberg

New York, April 3 – In the secondary market on Monday, UFC Holdings LLC’s term loan was stronger as the company’s parent, Endeavor Group Holdings Inc., announced plans to combine UFC with World Wrestling Entertainment Inc. (WWE).

Also, Hamilton Projects Acquiror LLC’s existing term loan B was unchanged with news that the company is seeking an amendment and a privately placed incremental term loan B.

Meanwhile, in the primary market, Melissa & Doug (MND Holdings III Corp.) withdrew its first-lien term loan, Belron, HarbourVest Partners and Flow Control Group all approached lenders with new term loans, and BBB Industries LLC joined this week’s calendar with an add-on term loan.

UFC inches higher

UFC’s term loan was stronger on Monday with news that its parent company will combine UFC with WWE to form a new, publicly listed company, according to market sources.

One source had the term loan quoted at 99½ bid, par offered, up from 99 3/8 bid, 99 7/8 offered on Friday, and a second source had the loan quoted at 99¾ bid, par 1/8 offered, up from 99 3/8 bid, 99¾ offered.

In addition to the news, the general market tone may have helped UFC’s term loan gain in trading as the overall market was unchanged to up about an eighth of a point on the day, the first source added.

Under the agreement, existing WWE shareholders will roll all existing equity into the new entity that will be the parent company of UFC and WWE. Upon close, Endeavor will hold a 51% controlling interest in the new company and existing WWE shareholders will hold a 49% interest in the new company.

The transaction values UFC at an enterprise value of $12.1 billion and WWE at an enterprise value of $9.3 billion. UFC and WWE will each contribute cash to the new company so that it holds about $150 million.

At closing, Endeavor intends to sweep all excess cash at UFC, and shareholders of the new company (other than Endeavor) are expected to receive a post-closing dividend.

UFC, WWE timing

Closing on the combination of UFC and WWE is expected in the second half of this year, subject to customary conditions, including regulatory approvals.

Net leverage at the combined company is anticipated to be 2.5x.

Morgan Stanley & Co. LLC and Goldman Sachs & Co. LLC are serving as financial advisors to Endeavor. The Raine Group is acting as lead financial advisor to WWE, and J.P. Morgan and Moelis & Co. LLC are also acting as financial advisors to WWE.

UFC is a Las Vegas-based mixed martial arts organization, Endeavor is a Beverly Hills, Calif.-based sports and entertainment company. WWE is a Stamford, Conn.-based integrated media organization and entertainment company.

Hamilton holds steady

Hamilton Projects’ existing $789 million term loan B due June 26, 2027 was unchanged on the day following news that the company is asking lenders to amend the debt and is looking to get a non-fungible $161 million privately placed incremental term loan B, market sources remarked.

One source had the term loan quoted at 98 7/8 bid, 99 7/8 offered and a second source had it quoted at 99 bid, 99¾ offered, with both claiming the paper was in line with where it closed out on Friday.

Pricing on the incremental term loan B is SOFR+CSA plus 450 basis points, another source said. The CSA is ARCC standard of 11.448 basis points one-month rate, 26.161 bps three-month rate and 42.826 bps six-month rate.

Hamilton amendment details

Hamilton Projects’ amendment to its existing term loan would allow for a one-time distribution of up to$285 million, inclusive of cash on the balance sheet, which would be funded in part by the incremental term loan, add 101 soft call protection for six months to the existing term loan B and shift pricing on the existing term loan B to SOFR with ARCC CSA from current pricing of Libor plus 450 bps.

Morgan Stanley Senior Funding Inc. is the left lead on the deal.

Consents are due at 5 p.m. ET on Thursday and lenders are being offered a 100 bps consent fee.

The amendment requires 50.1% approval from existing lenders.

Hamilton Projects is the owner of combined cycle gas fired power plants.

Melissa & Doug pulled

Moving to the primary market, Melissa & Doug withdrew its $260 million first-lien term loan due June 2026 from market as the company opted to go with a direct solution that provided for a longer dated tenor, a market source remarked.

Prior to being pulled, the term loan had filled out at pricing of SOFR+15 bps CSA plus 550 bps with a 100 bps PIK coupon step-up if the corporate rating was Caa1, a 1% floor, an original issue discount of 95 and 101 soft call protection for six months.

The PIK step-up was added during syndication.

Credit Suisse Securities (USA) LLC was the left lead arranger on the deal that was going to be used to extend an existing term loan due June 2024 priced at SOFR+15 bps CSA plus 350 bps with a 1% floor.

Melissa & Doug is a Wilton, Conn.-based specialty toy brand with an educational focus.

Belron holds call

Belron emerged in the morning with plans to hold a lender call at noon ET on Monday to launch an $870 million six-year first-lien term loan B (Ba2/BBB-) talked at SOFR+10 bps CSA plus 300 bps to 325 bps with a 0.5% floor, an original issue discount of 98 to 98.5 and 101 soft call protection for six months, according to a market source.

Commitments are due at 10 a.m. ET on Thursday, the source added.

BofA Securities Inc., Barclays, BNP Paribas Securities Corp., ING and JPMorgan Chase Bank are the joint global coordinators on the deal. Citigroup Global Markets Inc., Citizens, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Fifth Third, Goldman Sachs Bank USA, HSBC Securities (USA) Inc. and KBC are the bookrunners and arrangers.

The new term loan will be used to pay a dividend to shareholders.

Belron is a United Kingdom-based provider of vehicle glass repair and replacement services.

HarbourVest shops loan

HarbourVest Partners came out in the morning with plans to hold a lender call at 11 a.m. ET to launch a $500 million seven-year term loan B talked at SOFR plus 325 bps with a 0% floor, an original issue discount of 98 to 98.5 and 101 soft call protection for six months, a market source said.

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

JPMorgan Chase Bank is leading the deal that will be used to refinance an existing term loan B and add cash to the balance sheet for general corporate purposes.

HarbourVest is a private markets firm.

Flow Control launches

Flow Control Group launched without a lender call a fungible $75 million incremental first-lien term loan due April 2028 talked with an original issue discount of 96.5 to 97, according to a market source.

Pricing on the incremental term loan is SOFR plus 475 bps with a 0.5% floor.

Commitments are due at 5 p.m. ET on Tuesday, the source added.

KKR Capital Markets is leading the deal that will be used to fund acquisitions under letters of intent.

Flow Control is a Charlotte, N.C.-based distributor and technical adviser for mission critical flow control and industrial automation products and related services.

BBB readies deal

BBB Industries scheduled a lender call for 2 p.m. ET on Tuesday to launch a fungible $150 million add-on term loan due 2029 talked with an original issue discount of 93, a market source remarked.

Pricing on the add-on term loan is SOFR plus 525 bps with a 0.5% floor.

Commitments are due at 5 p.m. ET on Wednesday, the source added.

JPMorgan Chase Bank and KKR Capital Markets are leading the deal that will be used to fund acquisitions under letters of intent, to refinance some debt and for general corporate purposes.

BBB Industries is a Daphne, Ala.-based sustainable manufacturer of automotive replacement parts.

Fund flows

In other news, actively managed loan fund flows on Friday were negative $156 million and loan ETFs were positive $38 million, market sources said.

Outflows for loan funds year to date total $9.3 billion, sources added.

Loan indices rise

IHS Markit’s iBoxx loan indices were higher on Friday, with the Leveraged Loan indexes (MiLLi) closing out the day up 0.14% and the Liquid Leveraged Loan indices (LLLi) closing out the day up 0.19%.

Month to date, the MiLLi is down 0.14% and year to date it is up 3.06%, and the LLLi is up 0.36% month to date and up 3.3% year to date.

Average secondary market bids in the U.S. on Friday were 91.34, up 0.03% from the previous day and down 0.59% year to date.

According to the IHS Markit data, some of the top advancers on Friday were Fox US Bidco/Robertshaw’s February 2018 covenant-lite term loan B at 58, up from 52.40, Travel Leaders’ August 2018 covenant-lite term loan B at par, up from 92.06, and Wastequip’s March 2018 covenant-lite term loan at 91.25, up from 88.09.

Some top decliners on Friday were Air Medical’s March 2018 covenant-lite term loan at 69.75, down from 73.60, Anastasia’s August 2018 covenant-lite term loan B at 78.75, down from 82.09, and Cano Health’s January 2022 covenant-lite term loan at 74, down from 75.79.

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