First Brands incremental term loan steady in trading post Horizon Global news

By Sara Rosenberg

New York, Jan. 3 – First Brands Group LLC’s non-fungible incremental senior secured term loan due March 30, 2027 held steady in the secondary market on Tuesday following news that the company is purchasing Horizon Global Corp.

The incremental term loan was quoted at 94 bid, 96 offered, unchanged from where it was quoted last week, a market source remarked.

The $425 million incremental term loan, which allocated on Dec. 12, is priced at SOFR+CSA plus 500 basis points with a 1% floor and was sold at an original issue discount of 93.5. CSA is 11.448 bps one-month rate, 26.161 bps three-month rate and 42.826 bps six-month rate, and the debt has 101 soft call protection for six months.

Proceeds from the incremental term loan were earmarked for adding cash to the balance sheet to support bids for new business, potential future acquisitions and other growth initiatives.

First Brands buying Horizon

Under the agreement, First Brands is purchasing Horizon Global for $1.75 per share, which represents a 31% premium to the trading price prior to the strategic alternative announcement in August 2022 and a 237% premium over the 30 day volume weighted trading price in Horizon Global’s common stock.

Closing is expected this quarter, subject to the tender of shares representing at least a majority of the total number of Horizon Global’s outstanding shares of common stock, the tender of series B preferred stock at a cash consideration equal to the applicable redemption price and other customary conditions.

First Brands is an automotive aftermarket platform. Horizon Global is a Plymouth, Mich.-based manufacturer of branded towing and trailering equipment.

Fund flows

In other news, actively managed loan fund flows on Friday were negative $126 million and loan ETFs were positive $45 million, market sources said.

Loan funds reported outflows the past two weeks totaling $499 million and $1.52 billion, respectively.

Outflows for loan funds in 2022 total $11.4 billion, including negative $3.2 billion ETF, compared to $46.5 billion of inflows in fiscal year 2021, sources added.

Loan indices rise

IHS Markit’s iBoxx loan indices were stronger on Friday, with the Leveraged Loan indexes (MiLLi) closing out the day up 0.03% and the Liquid Leveraged Loan indices (LLLi) closing out the day up 0.02%.

For December, the MiLLi is up 0.37% and for 2022 its down 1.27%. The LLLi is up 0.69% for December and down 1.8% for 2022.

Average secondary market bids in the U.S. on Friday were 91.95.

According to the IHS Markit data, some of the top advancers on Friday were Guggenheim Funds’ October 2016 covenant-lite term loan at par, up from 98.44, AMC Entertainment’s April 2019 covenant-lite term loan B at 53.85, up from 53.44, and West Corp.’s October 2017 covenant-lite term loan at 91.88, up from 91.30.

Some top decliners on Friday were Mad Engine’s June 2021 covenant-lite term loan at 81.58, down from 83.25, McAfee/Magenta’s July 2021 covenant-lite term loan at 85.13, down from 86.50, and McAfee/Magenta’s May 2021 second-lien covenant-lite term loan at 78.33, down from 79.38.

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