UPDATE 3: 5:47 p.m. ET 4/18/2023:
- Borrower: Optiv Parent Inc. (“Optiv” or the “Company”)
- Arrangers: Jefferies, KKR Capital Markets, U.S. Bank, Goldman Sachs, SMBC, Mizuho
- Facilities: $650 million first lien term loan
- Use of proceeds: Proceeds, along with a $260 million privately placed second lien PIK toggle facility, will be used to refinance Optiv’s existing debt and to fund the acquisition of ClearShark.
- Ratings: Corporate family rating: B3 (stable) / B- (stable); first lien: B3 / B- (3 recovery rating)
- Interest rate: SOFR+525 bps
- Floor: 1%
- Issue price: 96.5
- Maturity: August 2026
- Call protection: 101 soft call for six months
UPDATE 2: Optiv Security Shifts $75M to 2L Term Loan From 1L Amid Strong Demand From Private Credit FundsUPDATE 2: 10:48 a.m. ET 4/17/2023: KKR-sponsored Optiv Security is shifting $75 million to the second lien tranche from the first lien tranche of its $910 million amid strong demand from private credit and direct lending investors, according to sources.
The second lien tranche is now $260 million, up from $185 million, with pricing still at S+900 bps and an OID of 96. The first lien tranche is now $650 million, down from $725 million. Price talk for the first lien remains S+500-525 bps with an OID of 96.5.
Jefferies is the bookrunner for the loan. Commitments are now due tomorrow, Tuesday, April 18, pushed back from today at 5 p.m. ET.
KKR, Optiv and Jefferies did not respond to requests for comment.
--Geoff Burrows, James Holloway
UPDATE 1: Optiv Float Price Talk of SOFR+500-525 bps With 96.50 OID for $725M 1L Term LoanUPDATE 1: 3:30 p.m. ET 4/5/2023: Optiv floated price talk of SOFR+500-525 bps with a 1% floor and OID of 96.50 for its $725 million first lien term loan due August 2026.
Commitments are due Monday, April 17th @ 5pm ET
Original Story 12:22 p.m. UTC on April 5, 2023New Coverage: Optiv Security Launches $725M 1L to Fund Acquisition, Refi Existing Debt; Includes $185M 2L Placed at Around SOFR+900 Bps, 96 OID; Opening Leverage Over 6XOptiv Inc. has launched a $725 million first lien term loan due August 2026 via Jefferies and KKR Capital Markets, according to sources. A nondeal road show to privately market the transaction for the KKR-backed cybersecurity company was held earlier this year, but an expected launch was postponed when markets turned sour following the collapse of Silicon Valley Bank, they added.
The first lien, which carries a 101 soft call protection for the first six months, had been informally premarketed at SOFR+500 bps and 97 OID earlier this year, sources said.
The senior facility is complemented by a privately placed $185 million 4.5-year second lien priced at around SOFR+900 bps and 96 OID, sources noted. KKR, the private-equity sponsor, owned approximately $50 million of the $230 million second lien, and a large institutional investor stepped in to take a $100 million piece of the PIK toggle loan, sources added, noting the second lien pays PIK during the first year of the transaction.
Proceeds, along with the $185 million privately placed second lien PIK toggle facility, will be used to refinance Optiv’s existing debt and fund the acquisition of ClearShark. A lender call will be held today at 3 p.m. ET, and commitments are due April 17 at 5 p.m. ET.
Both the first and second liens have been well subscribed during the private marketing process, sources noted.
Opening leverage will be about 5x on the first lien and slightly over 6x on the second lien. For the third quarter of 2022, Optiv reported EBITDA of $120 million on revenue of about $2.5 billion, sources said.
One source, noting the high margins on the debt, said the business generates sufficient cash, and the company has hedged its rate exposure.
Optiv’s most direct peer is CDW, an Illinois-based cybersecurity company, sources said. However, it is a much better and larger business, providing similar products but more hardware than software, they added. CDW’s stock is trading at $187.98 per share today with a market cap of $25.5 billion. The company reported $2.026 billion of EBITDA for the 2023 fiscal year, a 25.81% increase over the previous year.
KKR acquired Optiv in 2016 from a private-equity fund managed by Blackstone, which will maintain a minority interest in Optiv along with management. Other selling shareholders included Investcorp and Sverica. In March, Optiv
announced the acquisition of Maryland-based ClearShark LLC and ClearShark Services, a reseller of cybersecurity and modernization technology to the U.S. federal government.
--Adelene Lee