With the festive season in full swing, issuers have pushed through to get the final deals of 2023 done in the last week of an active primary market.

Five loans printed this week and four managed to allocate at the tight end of guidance. The only deal left in primary is from NEP Group, a US-based TV production company, that expects to price its multi-tranche term loan B later today (15 December).

Despite it being the season of giving, lenders were not giving up on their hard lines in documentation and some lead banks had to come with last minute covenant giveaways to get the deals over the finish line.

Primary focus

Synlab, a Germany-headquartered lab group, was one of those that made last minute documentation changes to the covenant package in the syndication of its EUR 1bn TLB and EUR 450m senior secured bond.

The original aggressive documentation had been brought up as a concern in Debtwire‘s preview of the deal, with buysiders sending a laundry list of terms they would like to see changed before buying in.

“[There was] partial success in pushback,” said one of the sources. “No success in pushing back high watermark, and the extensive ‘no worse’ loophole in additional indebtedness.”

The main concession from the company related to EBITDA addbacks, now capped at 25% of the structuring EBITDA and realisable in 24-months’ time, said the sources. The contribution debt has been reduced to 100% of any cash contributions by the sponsor and the inside maturity debt has been also reduced to 50% of the structuring EBITDA. Read the full list of changes in Debtwire’s report.

The covenant package was not an issue with Nemera’s EUR 590m term loan B. The only documentation change made during the syndication of the global manufacturer of drug delivery devices included the amendment of a margin ratchet.

“No changes, but we didn’t ask for one. Docs weren’t that aggressive to start with,” said a buysider participating in the deal.

Nemera has allocated a EUR 590m-equivalent term loan B split between A USD 75m portion coming at SOFR+ 500bps with a 98 OID and the EUR 525m tranche at 98.5 with a Euribor+ 500bps margin. Initial talk on the euro tranche was 97.5-98 with a E+ 500bps margin, revised to 98-98.5 at final terms.

The business has an attractive position in a resilient sector, but at least three potential new lenders that Debtwire spoke to have decided to not play the credit because of the aggressive capital structure.

The company has a robust expansionary capex that will persist at least until 2025 at roughly EUR 100m per year which is bigger than what the company is expected to earn. Some lenders view this as the biggest risk of the credit. Read more in Debtwire’s report.

The only deal that struggled was Euroports. The Dutch port operator has priced a downsized EUR 490m deal, from EUR 500m, at Euribor+ 500bps and 97 OID. The price came out of the original price talk of E+ 450bps-475bps and 98.

With a busy primary and not enough time the deal has struggled to get traction with some of the potential new lenders that Debtwire spoke to.

“We didn’t play—not enough material for us as a new investor, short timing, new sponsor, JPM being sole lead nature. It smelled a bit fishy, all in all,” said the first buysider.

Proceeds, alongside a pre-placed second-lien loan, which has been increased in size to EUR 73m from EUR 70m at launch, will refinance the existing TLB and repay a second-lien loan, a FundCo loan and RCF drawings. Pricing on the second-lien loan has been widened too, out to E+ 725bps with a 97 OID from E+ 700bps and 98 at launch.

“We were a pass. A bit of hair on that whole structure. We were struggling a bit with the sponsor, and they are taking out a dividend and then there is the cyclical nature of the business,” said a second buysider.

Another issue lenders took was with the majority shareholder (over 50%) R-Logitech, a subsidiary of Monaco World Resources.

R-Logitech restructured its EUR 200m bond in March 2023, as reported, and buysiders were worried that there could be a potential transfer of assets away from Eurosports should more trouble arise at R-Logitech.

“There is too much risk associated with the shareholder structure,” said a third buysider.

Moving to other transactions, Idemia Group, a French identity and bank card chip producer, priced its increased EUR 300m fungible term loan B add-on at Euribor+ 475bps with 99.75 OID. The price came at the tight end of final guidance of 99.5-99.75 OID and tighter than the previous one, at 99.0-99.5.

INNIO Group, an Austrian product manufacturer for the energy sector, has also priced the USD 600m portion of its term loan B at the tight end of talk at SOFR+ 425bps with a 99.5 OID. The deal was previously guided at S+ 425bps-450bps and 98.5.

The EUR 1.1bn tranche priced at 99.5 with a Euribor+ 425bps margin. Final pricing came at the tight end of final guidance of 99-99.5, from previous guidance at E+ 425bps-450bps and 98.5 OID.

Loan Snapshot

The leveraged loan pipeline this week features one deal totaling EUR 482m. There is a further EUR 79.5bn worth of estimated debt financing based upon current early-stage situations in the M&A Calendar.

To access the Debtwire Par: Large-Cap Leverage Loans Origination Pipeline, please click here. Debtwire Par subscription required.

Early Stages

KKR is finalising a GBP 1.4bn-plus debt package that could be funded by both direct lenders and banks to support its anticipated takeover of IRIS Software, as reported. The sponsor is in advanced negotiations with private-credit funds and banks after reportedly edging out competition from CVC and Leonard Green & Partners with a GBP 3bn bid.

Ardian is readying an exit from Audiotonix as the sponsor prepares to select sellside and due diligence advisors in the coming weeks, as reported. The buyout group is this month taking pitches from investment banks vying to oversee an auction of the UK-based audio console provider. In the event of a formal auction, Audiotonix is expected to be marketed off annual EBITDA of GBP 130m–GBP 140m, the first and third sources said.

In Syndication

Allocated

Weekly leveraged loan issuance

Term loan B weighted average margin

Flex activity

Debtwire Europe composite of most liquid loans