Mon 07/13/2020 05:23 AM
Week Ended July 10

Value leakage from borrower groups is a key area of concern for both senior secured lenders and sponsors. Sponsors are pushing for ever greater autonomy in terms of their ability to manage businesses, divest of non-core assets and raise capital from strategic disposals, as well as greater flexibility in managing the capital structure. Lenders continue to focus on the preservation of assets and revenue-generating capabilities within the group on which they based their decision to lend, so that revenue is available to service debt and support the business and so that their loans continue to be sufficiently collateralized.

In this latest article in our Navigating Uncertainty series, our legal analysts explore the key documentary provisions relating to value leakage via asset disposals in the European leveraged loan market and highlight some of the main areas of concern for lenders.


On July 2, McLaren launched a consent solicitation for its £370 million and $350 million notes due 2022. In exchange for the amendments proposed by the deal, the group has agreed to provide additional covenants regarding certain of the notes’ collateral. The proposals require the consent of a majority of noteholders and the group sets out that it already has positive indications from the required majority. The consent solicitation will not provide the noteholders with a fee.

On July 10, the group announced that its consent solicitation has been successful and that, as of July 9, it received the requisite consent level of 50% to approve the proposed amendments.

Our legal analysts reviewed the consent solicitation statement.

Primary Market

Last week, Latvian telecommunications group Bite upsized its offering to €650 million from €620 million and priced its €400 million 5.5-year fixed rate notes at par to pay a coupon of 4.625%. The €250 million 5.5-year FRNs have priced at 99.5 with a spread of 462.5 basis points over Euribor.

Our legal analysts highlighted their key covenant and structural concerns.


On Wednesday, Parts Europe priced its new five-year €300 million senior secured bond at par with a coupon of 6.5%.

Our legal analysts reviewed Parts Europe’s new bond documentation.


On Wednesday, Verisure launched a €1 billion bonds and loan package, with proceeds used to repay drawings under the existing facilities TLB1F and TLB1E. On Thursday, the group said it has increased the size of its TLB offering to €800 million, from earlier predictions of between €300 and €500 million, and upsized its senior secured notes offering to €800 million, from earlier guidance of between €500 million and €700 million. The final price of the TLB is Euribor+400 basis points with a 99.5 OID, while the bond has a coupon of 3.875%.

Our legal analysts highlighted the key covenant and structural concerns.


U.S. retail technology group Diebold Nixdorf launched an offering of $690 million of new senior secured notes due 2025 while its Dutch subsidiary sought to raise €350 million through new senior secured 2025 notes.

Our legal analysts reviewed Diebold Nixdorf’s new bond documentation.


Skyscraper, BASF’s Construction Chemicals business, launched a €1.625 billion loan funding package to finance its acquisition by private equity firm Lone Star and increased the size of its new term loan B by €110 million to €810 million. The tranche has been priced at 98 with a margin of Euribor+450 basis points.

The borrower has reduced the size of the second tranche, a €775 million-equivalent in dollars pre-placed loan, to €675 million-equivalent.

Other Resources

Our updated RCF tracker was published on July 7. An updated version will be published on Tuesday, July 14.



(Click HERE to see the full tracker)

In our weekly Covenant Conversations podcast, Reorg’s Shweta Rao spoke to Muzinich & Co’s Senan Kiran about:

  • The multiple factors driving covenant pushback, of which the credit story is just one;

  • The use of flexibility in documents: caveat emptor - know your documents; and

  • IFRS 16, calculating covenant capacities and campaigning to increase transparency.

Our weekly Coronavirus Impact Recap can be found HERE.

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