Ankura Consulting firms pricing on first- and second-lien term loans

By Sara Rosenberg

New York, March 10 – Ankura Consulting Group LLC set pricing on its $465 million seven-year covenant-lite first-lien term loan (B2/B-) at Libor plus 450 basis points, the high end of the Libor plus 425 bps to 450 bps talk, and on its $150 million eight-year covenant-lite second-lien term loan (Caa2/CCC) at Libor plus 800 bps, the low end of the Libor plus 800 bps to 825 bps talk, according to a market source.

The first-lien term loan still has a 0.75% Libor floor, an original issue discount of 99 and 101 soft call protection for six months, and the second-lien term loan still has a 0.75% Libor floor and a discount of 98.5.

The second-lien term loan still has call protection of 102 in year one and 101 in year two, but the call protection was revised to include refinancing/repayment in connection with a change of control or initial public offering of 101 in year one and year two, the source said.

First-lien term loan documentation changes included revising MFN to 50 bps for life from 75 bps with a 12-month sunset, eliminating the “broadly syndicated” language and extending the outside maturity exception to two years, and modifying incremental facilities to eliminate the “no worse than” prong and make the unlimited incremental equivalent debt secured by non-collateral subject to a secured net leverage test instead of a total net leverage test.

Also, under the first-lien loan, the inside maturity basket was reduced to the greater of $50 million and 50% of EBITDA from the greater of $100 million and 100% of EBITDA, asset sale step-downs were eliminated under mandatory prepayments, the restricted payments unlimited ratio was reduced to 5.15x total net leverage from 5.65x, the investments unlimited ratio was reduced to 5.65x total net leverage from 6.15x, and a basket that allowed debt incurrence with unused dividend capacity was eliminated under restricted payment debt capacity.

Furthermore, the first-lien term loan documentation was revised to introduce a 30% cap under EBITDA on pro forma “run rate” cost savings, operating expense reductions and synergies that have been taken or expected to be taken within 24 months, to require maintenance of Moody’s and S&P ratings instead of ratings from two of the three rating agencies, to remove change-of-control portability, and to add customary Chewy, J-Crew and Mytheresa protections, the source continued.

Regarding the second-lien term loan documentation, the cushions to the first-lien was revised to place a 20% cushion on dollar baskets instead of a 25% cushion and eliminate the cushion on incurrence ratios.

The second-lien loan also saw the addition of customary anti-layering protection.

Deutsche Bank Securities Inc., Jefferies LLC, MUFG and Truist are the bookrunners on the deal, with Deutsche Bank the left lead on the first-lien term loan and Jefferies the left lead on the second-lien term loan.

Commitments are due at 5 p.m. ET on Thursday, accelerated from noon ET on Friday, the source added.

Allocations are expected on Friday.

Proceeds will be used to refinance existing debt.

Ankura is a specialty consulting platform.

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