Traeger falls with downgrades; AMC better on rumored Amazon interest; Tricor revised

By Sara Rosenberg

New York, March 28 – In the secondary market on Tuesday, Traeger (TGP Holdings III LLC) saw its first-lien term loan retreat after Moody’s Investors Service downgraded the company’s ratings, and AMC Entertainment Holdings Inc.’s term loan was higher with chatter of potential interest by Amazon.com Inc. to purchase the company.

Meanwhile, over in the primary market, Tricor/Vistra (Thevelia (US) LLC) disclosed tranching on its incremental first-lien term loan B, revised original issue discount guidance on the U.S. and euro pieces, and made some modifications to documentation.

Traeger softens

Traeger’s first-lien term loan fell to 79¼ bid, 80¼ offered on Tuesday from 79½ bid, 80½ offered of Monday following downgrades from Moody’s, a trader said.

Moody’s trimmed the company’s corporate family rating and senior secured first-lien credit facility rating to Caa1 from B3, and the outlook is negative.

“Today's ratings actions and negative outlook reflects Trager’s very high financial leverage and our expectation that leverage will remain elevated amid a challenging operating environment over the next 12 months,” stated Moody’s AVP-analyst Oliver Alcantara, in the rating release.

“The grilling season in 2023 will be critical for Traeger as it works to improve its profitability, but headwinds negatively impacting consumer demand for outdoor grills will continue in 2023 and will make it difficult for the company to sustainably and meaningfully improve earnings and free cash flow generation,” Alcantara added.

According to Moody’s, Traeger’s debt/EBTIDA leverage increased in fiscal 2022, ending Dec. 31, 2022 at around 15x, up from 5.3x as of fiscal 2021. Moody’s expects the company’s financial leverage will improve but will remain very high with debt/EBTIDA at around 10x by fiscal year end 2023.

Traeger is a Salt Lake City-based designer and marketer of outdoor cooking products.

AMC gains

AMC Entertainment’s term loan moved up to 70½ bid, 72 offered on Tuesday from 69 bid, 70 offered on Monday with market chatter that Amazon is investigating purchasing the company, a market source remarked.

The rumor also helped the company’s stock, which closed up 0.58 points, or 12.75%, on the day.

AMC is a Leawood, Kan.-based movie exhibitor.

Tricor tweaked

Moving to the primary market, Tricor/Vistra revealed that its roughly $1.66 billion equivalent incremental senior secured first-lien covenant-lite term loan B (B2//BB+) due June 2029 consists of a roughly $700 million tranche, a roughly €725 million tranche and a roughly HK$1.35 billion tranche, according to a market source. At launch, it was known that the debt would include a U.S. and euro piece, and possible a Hong Kong piece, but breakdowns were unavailable.

In addition, the floor on the U.S. term loan was changed to 0.5% from 0% and CSA was added that matches the CSA on Tricor’s existing term loan, and the original issue discount talk on the U.S. and euro term loans was changed to a range of 97 to 97.5 from a range of 96 to 97, the source said.

Furthermore, revisions were made to documentation, including to the ratio debt incurrence test for pari debt, MFN trigger threshold, restricted payments basket ratio, builder basket, contribution debt basket and consolidated EBITDA add-backs.

Also, asset sale step-downs were removed, J. Crew and Serta were added, and quarterly and annual lender calls are now required, the source continued.

As before, the U.S. term loan is talked at SOFR plus 475 basis points and the euro term loan is talked at Euribor plus 475 bps with a 0% floor.

Tricor lead banks

Goldman Sachs is the lead arranger and sole left lead bookrunner on Tricor/Vistra’s term loan debt. Barclays, Deutsche Bank Securities Inc., HSBC Securities, BNP Paribas Securities Corp., Citigroup Global Markets Inc., Credit Agricole, Morgan Stanley Senior Funding Inc., MUFG, Nomura and Standard Chartered are lead arrangers and joint bookrunners.

Commitments for the U.S. term loan were due at the end of the day on Tuesday and commitments for the euro term loan are due at 6 a.m. ET on Wednesday, the source added.

The new term loan debt will support the merger of Tricor, which was acquired by Baring Private Equity Asia (BPEA) in 2021, and Vistra, which was acquired by BPEA in 2015, and to prepay Vistra’s existing first-lien term loan Bs.

Existing Vistra first-lien term loan B lenders can vote to register for cashless roll into the incremental term loan.

The maturity of the incremental term loan matches the maturity on Tricor’s existing first-lien term loan B.

Tricor is a Hong Kong-based business expansion specialist. Vistra is a Hong Kong-based fund administrator and corporate service provider.

Fund flows

In other news, actively managed loan fund flows on Monday were negative $128 million and loan ETFs were negative $18 million, market sources said.

Outflows for loan funds week-to-date total an estimated $447 million, compared to outflows in the prior week totaling $1.74 billion, sources added.

Loan indices rise

IHS Markit’s iBoxx loan indices were higher on Monday, with the Leveraged Loan indexes (MiLLi) closing out the day up 0.21% and the Liquid Leveraged Loan indices (LLLi) closing out the day up 0.30%.

Month to date, the MiLLi is down 0.82% and year to date it is up 2.35%, and the LLLi is down 0.61% month to date and up 2.30% year to date.

Average secondary market bids in the U.S. on Monday were 91.13, up 0.01% from the previous day and down 0.82% year to date.

According to the IHS Markit data, some of the top advancers on Monday were Athletico Physical’s February 2022 covenant-lite term loan B at 72.75, up from 0.25, Prince International/Chromaflo/Ferro’s April 2022 covenant-lite term loan B at 87.50, up from 85.63, and LogMeIn’s August 2020 covenant-lite term loan B at 56.88, up from 56.

Some top decliners on Monday were Heritage Power’s July 2019 term loan at 30.25, down from 31.85, Lucky Bucks’ July 2021 covenant-lite term loan at 30.63, down from 31.43, and Cassa Systems’ December 2016 covenant-lite term loan at 82, down from 84.

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