Exela upsizes secured notes to $1 billion, hikes talk to 9% area, pulls unsecured tranche

By Paul A. Harris

Portland, Ore., June 27 – Exela Technologies overhauled the bond and bank loan portions of debt financing being put in place for the creation of the company through the merger of Quinpario Acquisition Corp. 2, SourceHOV LLC and Novitex Holdings Inc, a syndicate source said on Tuesday.

Changes in the debt package have the senior secured notes due 2023 (B2/B+) upsized to $1 billion from $525 million.

Talk on the secured notes increased to the 9% area from previous yield talk of 7¼% to 7½%.

Books close at noon ET Wednesday, a shift in timing that has the deal in the market one extra day; the previous scheduled close of books was Tuesday morning.

A proposed $300 million tranche of seven-year unsecured notes is withdrawn, with proceeds shifted to the secured notes.

RBC Capital Markets LLC is the left bookrunner for the notes offering. Credit Suisse Securities (USA) LLC, Natixis and KKR Capital Markets are the joint bookrunners.

The concurrent bank loan is also downsized to $350 million from $525 million. As with the pulled unsecured notes, proceeds are shifted to the upsized secured notes tranche.

Other funds for the roughly $2.8 billion merger will utilize cash from Quinpario, rollover equity and cash on hand at closing.

Shareholders of SourceHOV and Novitex are rolling 100% of the current equity and will be the majority shareholders of the combined company.

The combined company is expected to have about $1.5 billion in revenue in 2017.

Closing is expected this quarter, subject to customary conditions, regulatory approvals, receipt of approvals from Quinpario stockholders and receipt of proceeds from debt and equity financing.

Quinpario is a St. Louis-based special purpose acquisition company that completed its initial public offering in January 2015. SourceHOV, majority owned by HandsOn Global Management LLC, is an Irving, Texas-based provider of Transaction Processing Solutions and Enterprise Information Management solutions. Novitex is a West Stamford, Conn.-based provider of technology-driven managed services that is owned by Apollo Global Management LLC.

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