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CORRECTED-LPC-Verisure increases loan refi to €425m, cuts pricing
March 8, 2017 / 5:02 PM / 9 months ago

CORRECTED-LPC-Verisure increases loan refi to €425m, cuts pricing

(Changes soft call period in para 7 to 3 months from one year)

By Claire Ruckin

LONDON, March 8 (Reuters) - Strong investor demand for European leveraged loans has allowed Swedish home alarm company Verisure to increase the size of a leveraged loan refinancing to €425m, banking sources said on Wednesday.

The company has also been able to tightened the interest margin to 300bp as single B rated companies start to enjoy lower pricing that higher rated BB companies have been able to access for the last six months.

The loan, which allocated on Wednesday afternoon, was increased by €75m from an original target of €350m, after a positive response from investors. Pricing tightened to 300bp, with a 0% Libor floor at par.

Pricing guidance of 325bp-350bp was issued on March 6 and was cut to 300bp-325bp on March 7, before settling at a final price of 300bp on March 8.

The rapid decline in pricing guidance highlights the erosion of yield in the European leveraged loan market, which mirrors similar trends in the US, as borrowers take advantage of deep liquidity to obtain the best terms.

Pricing has fallen heavily since the start of 2017 with little resistance from investors, who have few alternatives and need to put money to work.

Investors also took a hit on 101 soft-call protection which was reduced to three months to 12 June 2017, from original guidance of six months.

Soft call offers some protection to investors as it prevents a borrower from being able to refinance or reprice loans without paying a hefty fee.

The €425m term loan B1-D, which matures in October 2022, will be used to repay a €280m-equivalent B2 tranche, denominated in Swedish krona as well as drawings under a €300m revolving credit facility. It will also be used for general corporate purposes.

The Swedish krona term loan is currently priced at 425bp over Stibor with a 1% floor.

Along with the krona term loan and revolver, the company’s senior facilities also include a €1.265bn term loan B1-C.

Hellman and Friedman bought Bain Capital’s stake in Verisure in October 2015, which was financed with a €1.02bn term loan B that priced at 425bp over Euribor, with a 1% floor and an OID of 99.

That deal was repriced in June 2016 to 350bp over Euribor with a 1% floor and a 25bp consent fee, along with a €135m incremental add-on tranche priced at par.

Verisure then repriced the margin again in December 2016 to 325bp over Euribor with a 0.5% floor at par and raised a €110m term loan to pay a dividend.

All three loans were then rolled into the €1.265bn term loan. (Editing by Tessa Walsh)

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