Wed 05/05/2021 15:59 PM
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Blue Ribbon LLC’s $368 million senior secured term loan B ultimately priced at L+600 bps, 75 bps LIBOR floor and 97.5 OID, at the wider end of revised guidance of L+575bps-600bps, according to a document reviewed by Reorg. Syndication of the facility closed Tuesday, and the loan was indicated at 98.5/100.5 today, according to sources. Continue reading as our Americas Middle Market team analyzes the Blue Ribbon LLC refinancing loan and Request a Trial for access to our coverage of thousands of other stressed/distressed debt situations as well as access to the linked documents throughout this article.

At launch, the refinancing deal had been talked at L+500bps, 75 bps LIBOR floor with an OID of 98.5-99 and a 101 soft call for six months. The call protection was also revised to no call for the first year and at par thereafter.

In addition to changes in the pricing, pushback from investors also resulted in other terms being tightened from launch so that the Irwindale entities would remain the subsidiary of the borrower and any asset sale proceeds would be used to repay the term loan, subject to a 2.5x leverage test for four consecutive quarters. The subsidiary may distribute sale proceeds to equityholders only if it maintains that leverage for four consecutive quarters. The company had originally proposed to distribute equity interests of IBY Holdings LLC or any of its subsidiaries within 45 days of closing.

Other changes include the removal of the incremental debt basket, the incremental inside maturity basket and the incremental “no worse” tests, which originally allowed for debt incurrence for acquisition or investment purposes so long as the applicable leverage ratio is no worse after the acquisition, according to the document.

The threshold for the most favored nation, or MFN, was also removed, as were the maturity carve-out and the acquisition carve-out. The type of debt covered by the clause was changed from syndicated floating-rate loans only to all pari passu debt, including notes. Additionally, the basis of calculation for the MFN was changed from just the margin to include OID or upfront fees.

The excess cash flow sweep threshold and the threshold for dollar credits were also removed in the final documentation. All asset sale stepdowns were also removed. Originally, the stepdowns were set at 100% with stepdowns to 50% and 0% when first lien leverage is less than 3.6x and 3x, respectively.

The general restricted payments basket was changed from greater than $43.5 million and 50% of EBITDA to greater than $21.75 million and 25% of EBITDA. The restricted payments threshold was changed from 3.75x total net leverage to 2.85x total net leverage, and the restricted debt payments threshold was also amended from 3.75x to 3.1x. The ability to make restricted debt payments based on junior debt carve-outs was also removed.

Investments and acquisitions for nonguarantors were changed from greater than $87 million and 100% of EBITDA to greater than $21.75 million and 25% of EBITDA.

The general investments basket was also tightened from the greater of $39.15 million and 45% of EBITDA to the greater of $21.75 million and 25% of EBITDA. The investment basket was also changed from 4.1x total net leverage to 2.85x, while the fixed starter basket went from $43.5 million and 50% of EBITDA to $21.75 million and 25% of EBITDA. The excluded proceeds prong was removed, as were the event-of-default blockers.

The EBITDA definition was also tightened to limit the amount of addbacks. The cost savings cap was changed from 25% to 20%, and the look-forward period was shortened from 24 months to 18 months. The shared cap for future quality of earnings and cost saving was also changed from 30% to 25%. Exclusions from phantom guarantees were also removed.

--James Holloway, Ellen Schneider
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