Angelo Gordon is among the lenders leading a deal to provide new capital to Apex Tool Group in a priming deal that has outraged lenders left out of the transaction, according to two sources familiar with the matter.

The company on Wednesday (21 Feb) told creditors it had reached an agreement with a group of lenders to provide a USD 125m first out delayed draw loan to the liquidity-starved tool manufacturer, the first source and an additional source familiar with the matter said.

Under terms of the new money deal, the ad hoc lender group was given the opportunity to swap their first lien loans at 90 cents on the dollar into a new tranche A and second lien loans at 75 cents on the dollar into a new tranche B priced at S+ 1000bps, the same two sources said.

Meanwhile, lenders not in the group are now offered the opportunity to swap their holdings under less favorable terms, the same sources added. They have until 27 February to agree.

The Bain Capital-backed company is working with PJT and Kirkland & Ellis, while the ad-hoc lender group is advised by Akin Gump and Perella Weinberg Partners, said the sources.

Bain acquired Apex in 2013 for USD 1.55bn from joint venture partners Danaher Corp and Cooper Industries, with the backing of USD 1.285bn in debt financing. 

Moody’s Investors Service recently downgraded Apex’s corporate rating to Caa2 from Caa1 on expectations of continued weakness in cash flow generation and credit metrics for the next 12 to 18 months.

The Charlotte, North Carolina-based global manufacturer of hand and power tools for industrial, commercial, and retail customers recorded roughly USD 1.4bn in revenues for the twelve months that ended September 2023, according to Moody’s. Going forward, Moody’s projects Apex to have weak liquidity while leverage is projected to stay high at 10x.

Apex’s USD 855m L+525bps first line term loan due 2029 was last quoted at 63.5/67.5 on Markit, compared to 88.4/90 on Tuesday.

Apex Tool, Bain Capital, and the respective advisors did not respond to requests for comment. Angelo Gordon declined comment.