DTCC Creates New Loan Product; Compucom Seeks Buyout Financing
The Depository Trust & Clearing Corp. unveiled a new product that will allow participants in the syndicated-loan market to accurately record the amount allocated to them in a debt deal, as companies from Compucom Systems Inc. to La Frontera Generation LLC seek to raise capital in the loan market.
The DTCC product targets buy-side firms, who can submit their positions to the clearinghouse, which will then match them with the bank administering the loan, the New York-based company said today in a statement. Syndicated loans are provided by a group of investors and typically overseen by one or two of the banks arranging the debt.
Citigroup Inc. is arranging a $580 million term loan for Compucom to help back its buyout by Thomas H. Lee Partners LP. The debt will pay interest at 3.5 percentage points more than the London interbank offered rate, with a 1.25 percent minimum, according to a person with knowledge of the deal, who asked not to be identified because terms are private. The seven-year loan may be sold to investors at a discount of 99 cents on the dollar, the person said.
La Frontera, a unit of power plant operator NextEra Energy Resources LLC, is seeking a $1 billion loan that will be used to fund its reserve accounts and pay its parent company a dividend, according to a person with knowledge of the transaction. Bank of America Corp. is arranging the debt, said the person, who asked not to be identified because the details are private.
Caraustar Industries Inc., a maker of recycled paperboard, increased the size of a loan that will back its buyout by H.I.G. Capital to $400 million, while reducing the interest rate it will pay for the debt, according to a person with knowledge of the transaction.
A first-lien piece was increased to $350 million, from $330 million, said the person, who asked not to be identified because the deal is private. The financing also includes a $50 million asset-backed loan.
Caraustar will now pay interest at 6.25 percentage points more than Libor for the first-lien piece, after initially proposing 6.5 percentage points more than the lending benchmark, the person said. Libor will have a 1.25 percent floor. The company is selling the debt at 99.25 cents, compared with 99 cents originally offered, the person said.
Fairway Group Holdings Corp. (FWM), the supermarket chain focused on greater New York, is seeking to lower the rate on $314.3 million in loans, according to a person with knowledge of the transaction.
A $274.3 million term portion will pay interest at 4 percentage points more than Libor, with a 1 percent minimum on the lending benchmark, down from 5.5 percentage points and a 1.25 percent floor on Libor, said the person, who asked not to be identified because the deal is private.
Harland Clarke Holdings Corp., a provider of payment and marketing services, set the rate it will pay on a $750 million loan to refinance debt, according to a person with knowledge of the transaction.
The first-lien debt will pay interest at 5.5 percentage points more than the Libor, with a 1.5 percent minimum, said the person, who asked not to be identified because the deal isn’t public. The company had initially proposed a rate of 5.25 percentage points more than Libor and a 1.25 percent minimum on the lending benchmark.
The loan, which has no financial-maintenance requirements, will be sold to lenders at 99 cents on the dollar, the person said.
Loan prices were unchanged today at 98.49 cents on the dollar, hovering at the highest since July 19, 2007, according to the Standard & Poor’s/LSTA U.S. Leveraged Loan 100 Index.
To contact the reporter on this story: Christine Idzelis in New York at firstname.lastname@example.org
To contact the editor responsible for this story: Faris Khan at email@example.com