October 2023 Quarterly InsightsCategory

Performing Issuers Should Take Advantage of the Current Market Window with Opportunistic Transactions

By Leveraged Finance Team
•2 min read
  • Due to strong market fundamentals and lack of historical new issue supply, companies should take advantage of the market window through refinancing, repricing, and dividend transactions.
    • As of September 14th, YTD dividend volume was up 126% from the same period the year prior, from $5.5 billion to $12.3 billion, but this is still low compared to historical levels.
    • 52.5% of loans were bid at 99 or higher, which further supports additional opportunistic transactions getting done on a fungible basis.
    • Through September 15th, 15 of the 19 deals that have priced in the month to date period cleared tight of talk, with four of those transactions being opportunistic repricings.
  • Jefferies was Left Lead Arranger on CPM Holdings’ $1.215 billion First Lien Term loan, with proceeds from the deal used to refinancing existing debt due in 2025 and to fund a distribution to shareholders.
    • Term Loan priced at S+450, 0.50% floor and 98.5 OID.
    • Due to oversubscription of the order book, the First Lien Term Loan was upsized by $85 million to $1.215 billion, the margin was tightened from S+475 to S+450 and OID was tightened from 98.0 to 98.5.
  • Jefferies was Left Lead Arranger on Lakeshore Learning’s $150 million First Lien Term Loan to fund a dividend to the sponsor.
    • Lakeshore is a leading developer, distributor and retailer of educational products and classroom furniture, primarily serving the Early Childhood Education and K-5 markets.
    • The dividend was met with robust lender demand and was upsized by $50 million in market.
    • Pricing on the Fungible First Lien Term Loan is S+CSA+350 with a 0.50% floor.
  • Jefferies was Left Lead Arranger on Nomad Foods’ repricing of their $700 million First Lien Term Loan.
    • Nomad Foods operates across 22 countries in Europe and is the leading Western European player in savory frozen food, and the third largest branded savory frozen food company in the world.
    • The loan repriced at S+300 from S+370, allowing the company to take advantage of the strong market window and lower their weighted average cost of debt.
  • Jefferies acted as Left Lead Bookrunner on the recently completed $165 million add-on for Heartland Dental to its existing 10.5% Senior Secured Notes.
    • The company was able to upsize the tack-on quantum from $100 million due to heavy oversubscription.
    • Heartland Dental took advantage of the strong market and cleaned up their capital structure by repaying the amount outstanding under their stub term loan due in 2025, with the remainder of the proceeds allocated as cash to the balance sheet for general corporate purposes.