LONDON (LPC) - UK-based recruitment company Alexander Mann has significantly widened the discount on its £325m buyout financing and made substantial changes to the deal’s documentation to help it clear the market.
The discount on the term loan B, which backs Canadian pension company OMERS buyout of the company, has been widened to 96 - a level that can either wipe out arranging banks’ fees or imply losses for lenders.
OMERS agreed to buy the business alongside New Mountain Capital for £820m in May and Bank of America Merrill Lynch and HSBC are bookrunners and mandated lead arrangers on the deal.
“This appears to be the toughest deal in the market,” a syndicate head away from the deal said.
The original £325m all-sterling term loan B has been changed and now includes a sterling term loan tranche that will total £200m to £225m and a new dollar tranche of £100m to £125m equivalent.
Both tranches are guided at 550bp over Libor, up from 500bp originally on the sterling tranche, and both are being offered at a discount of 96 with a 0% floor. The discount was previously 99.5.
A raft of documentation changes have also been made, including tightening terms on a free debt incurrence basket, permitted payments, Ebitda adjustments and mandatory prepayments.
Several European leveraged loans have run into turbulence lately as the market works through an increase in supply that has allowed investors to be choosier on the credits they are willing to support.
“There’s been a few tricky deals come to market recently and it is even harder in these tougher conditions. A lot of investors are probably thinking they can wait and pick it up cheaper in secondary,” the syndicate head said.
A maintenance covenant has also been included and the MFN clause has been improved. Soft call protection has also been extended from six to twelve months at 101.
Unconditional commitments are now due on August 7.
Alexander Mann provides management consulting and recruitment services to international businesses.
Editing by Tessa Walsh