Qualtrics, PDC Wellness break; Spirit Aero dips with Boeing news; Live Nation gains

By Sara Rosenberg

New York, April 14 – Qualtrics (Quartz AcquireCo LLC) increased the size of its heavily oversubscribed first-lien term loan B, reduced the spread, removed one pricing step-down, trimmed the floor and modified the original issue discount before freeing up for trading on Friday, and PDC Wellness & Personal Care Co.’s (Parfums Holding Co. Inc.) first-lien term loan broke as well.

Also in trading, Spirit AeroSystems Inc.’s term loan B softened in trading on news of a quality issue on components it provides to Boeing, and Live Nation Entertainment Inc.’s term loan was stronger following ratings upgrades by Moody’s Investors Service.

And, in more happenings, price talk emerged on ImageFirst Holdings LLC’s add-on term loan and Belfor Holdings Inc. joined the near-term primary calendar.

Qualtrics revised

Qualtrics lifted its seven-year first-lien term loan B (B1/B) to $1.2 billion from $1 billion, lowered pricing to SOFR plus 350 basis points from talk in the range of SOFR plus 375 bps to 400 bps, eliminated a 25 bps pricing step-down at 1.25x gross leverage, cut the floor to 0% from 0.5% and changed the original issue discount to 99 from 98, according to a market source.

As before, the term loan has a 25 bps step-down upon an initial public offering, 101 soft call protection for six months, and ticking fees of half the spread from days 46 to 90 and the full spread thereafter.

JPMorgan Chase Bank, BMO Capital Markets, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., KKR Capital Markets, Mizuho, RBC Capital Markets, UBS Investment Bank and Wells Fargo Securities LLC are leading the deal.

Qualtrics hits secondary

Recommitments for Qualtrics’ term loan were due at 11 a.m. ET on Friday and the debt freed to trade later in the day, with levels quoted at 99 5/8 bid, par 1/8 offered, another source added.

The term loan will be used with equity to fund the buyout of the company by Silver Lake and Canada Pension Plan Investment Board for $18.15 per share in cash. The transaction values Qualtrics at about $12.5 billion.

As a result of the term loan upsizing, the amount of equity being used for the transaction was reduced.

Closing is expected in the second half of this year, subject to customary conditions, including the receipt of the regulatory approvals.

Qualtrics, based in Provo, Utah, and Seattle, is a cloud-native software provider that helps organizations identify and resolve points of friction across all digital and human touchpoints in their business.

PDC frees up

PDC Wellness & Personal Care’s $655 million covenant-lite first-lien term loan due June 2026 broke for trading in the afternoon, with levels quoted at 94 bid, 95 offered, a trader said.

Pricing on the term loan is SOFR+CSA plus 600 bps with a step-up to SOFR plus 650 bps if net total leverage is greater than 5.25x upon the delivery of fiscal year 2023 financials and a 1.5% floor. The loan was sold at an original issue discount of 94 for new money and offered a 600 bps extension fee for existing lenders. CSA is 11.4 bps one-month rate, 26.2 bps three-month rate and 42.8 bps six-month rate. The debt has hard call protection of 102 in year one and 101 in year two.

The Stamford, Conn.-based wellness and personal care products company’s $694 million of credit facilities (B3/B-) also includes a $39 million revolver due March 2026.

Closing is expected at the end of this month.

PDC lead banks

Nomura Securities, Macquarie Capital (USA) Inc. and others to be named are leading PDC’s term loan, which will be used to extend the company’s existing revolver and first-lien term loan maturities by two years. Current pricing on the existing term loan is Libor plus 400 bps with a 0% floor.

During syndication, the term loan was upsized from up to $648.6 million, the call protection was changed to include repayments upon an acceleration event and any asset sale sweep from a sale of the Dr Teal’s brand, the incremental facilities was revised to reduce the starter basket to $50 million/50% LTM bank adjusted EBITDA, and the 50 bps MFN for life was expanded to include notes or bonds and remove same currency qualifier.

Also, during syndication, the capital lease basket was reduced to $10 million/10% LTM bank adjusted EBITDA, the asset sale basket was reduced to $2.5 million/2.5% LTM bank adjusted EBITDA, repurchases of management stock was limited to $5 million/5% LTM bank adjusted EBITDA if total net leverage is greater than 4x and the qualified receivables financing basket was reduced to $35 million.

In addition, during syndication, the company added a 12.5% EBITDA add-back cap, including business optimization expenses and restructuring charges, lender calls were changed to be required quarterly instead of at the agent’s request, control agreements were established for cash accounts, and revisions were made to asset sales/acquisitions.

Spirit Aero retreats

Spirit AeroSystems’ term loan B fell to 98½ bid, 99½ offered on Friday from par 1/8 bid, par 3/8 offered on Thursday due to problems with parts it provides to Boeing, which has led Boeing to pause deliveries of some 737 MAX planes, according to a trader.

Spirit AeroSystems said in a statement that it notified Boeing of a quality issue on the aft fuselage section of certain models of the 737 fuselage that Spirit builds.

“Spirit is working to develop an inspection and repair for the affected fuselages. We continue to coordinate closely with our customer to resolve this matter and minimize impacts while maintaining our focus on safety,” the statement added.

Spirit AeroSystems is a Wichita, Kan.-based designer and builder of aerostructures for both commercial and defense customers.

Live Nation rises

Live Nation’s term loan was quoted at 98¼ bid, 99¼ offered on Friday, up from 98 bid, 99 offered on Thursday as the company’s corporate family rating was upgraded to B1 from B2 and its senior secured rating was lifted to Ba3 from B1 by Moody’s, a market source remarked. The outlook is stable.

“The ratings upgrade reflects the strong recovery in concert attendance and sponsorship revenue which has improved Live Nation’s operating performance” said Jason Mercer, Moody’s vice president senior analyst, in the rating release.

The company’s full-year 2022 revenue was almost $17 billion, a 40% increase over pre-pandemic 2019 revenue, according to Moody’s.

“We expect strong liquidity and leverage of about 5.5x through to 2024,” Mercer added in the release.

Moody’s said that the company’s liquidity sources include unrestricted cash of $1.2 billion, $579 million of availability under a $630 million revolving credit facility that matures in October 2024, and Moody’s expected free cash flow of about $450 million over the next 12 months.

Live Nation is a Beverly Hills, Calif.-based provider of live music concerts and live entertainment ticketing sales and marketing services.

ImageFirst guidance

ImageFirst came out with talk on its non-fungible $100 million add-on covenant-lite term loan (B3/B) at SOFR+CSA plus 550 bps with a 0.75% floor, an original issue discount of 97 and 101 soft call protection for six months, a market source said. CSA is 10 bps one-month rate, 15 bps three-month rate and 25 bps six-month rate.

Commitments for the loan, which launched with a lender call on Thursday afternoon, are due on April 26, the source added.

Antares Capital is leading the deal that will be used for general corporate purposes and to fund acquisitions under letters of intent.

In connection with this transaction, pricing on the company’s existing $265 million first-lien term loan will be changed to SOFR+CSA plus 500 bps with a 0.75% floor from Libor plus 450 bps with a 0.75% floor.

Pro forma leverage is 3.5x and pro forma adjusted EBITDA is $98 million.

Calera Capital is the sponsor.

ImageFirst is a King of Prussia, Pa.-based provider of linen, laundry, and safety and hygiene services specializing in the health care industry.

Belfor on deck

Belfor set a lender call for 10 a.m. ET on Monday to launch a fungible $300 million add-on term loan due 2026, a market source remarked.

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

JPMorgan Chase Bank is leading the deal that will be used to repay revolver borrowings and for general corporate purposes.

Current pricing on the existing term loan is SOFR plus 425 bps with a 0.5% floor.

Belfor is a Birmingham, Mich.-based disaster recovery and property restoration company.

Fund flows

In other news, actively managed loan fund flows on Thursday were negative $29 million and loan ETFs were positive $32 million, according to market sources.

Loan funds reported weekly outflows totaling $461 million, including positive $2 million ETFs. This compares to the prior four weeks’ outflows of $592 million, $712 million, $1.74 billion and $1.58 billion, sources continued.

Leveraged loan funds have reported 33 outflows in the last 34 weeks with actively managed funds experiencing a 49th consecutive weekly withdrawal.

Dedicated loan fund AUM is down to $94 billion from $142 billion in May 2022.

Outflows for loan funds in 2023 total $11.8 billion, versus outflows of $12.8 billion in 2022, sources added.

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