Targus Term Loan Breaks Above Par

Targus International's $190 million first-lien term loan broke in the secondary market at 101 last week and traded as high as 101 3/8.

  • 23 Nov 2005
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Targus International's $190 million first-lien term loan broke in the secondary market at 101 last week and traded as high as 101 3/8. The loan will be used to finance Fenway Partners' $420 million acquisition of Targus International from Apax Partners. The loan is priced at LIBOR plus 3%.

The credit also consists of a $85 million second-lien term loan, which is still in syndication. Leads UBS and Goldman put together the second-lien loan after they scrapped a planned bond offering. A trader said pricing on the second lien is being tweaked so that it will get maximum distribution. He said price talk is LIBOR plus 7.5%. "The market is sketchy for second liens. Everyone is asking for more. If a deal is priced at LIBOR plus seven, someone else will ask for LIBOR plus eight," said a trader.

Standard & Poor's assigned a B rating to the first lien term loan. It also assigned a '2' recovery rating to the credit, indicating first lien lenders can expect a 80%-100% recovery of principal if it defaults. The rating agency also assigned a CCC+ rating to the second lien loan. It assigned a '5' recovery rating to the credit, which shows that it expects lenders will obtain a 0-25% recovery of principal if it defaults. Standard & Poor's assigned the same rating to the second lien as they assigned the scrapped $150 million senior subordinated note offering.

Mark Salierno, analyst at S&P, said that in the event of default second-lien creditors can expect only a modest recovery. "If it defaults, the first lien will get a substantial return. The second-lien creditors could get something back, but we anticipate it would be negligible," he said. A Targus spokeswoman did not return calls by press time.

  • 23 Nov 2005

GlobalCapital European securitization league table

Rank Lead Manager/Arranger Total Volume $m No. of Deals Share % by Volume
1 Citi 4,347 16 16.63
2 BNP Paribas 2,866 11 10.96
3 Morgan Stanley 2,420 6 9.26
4 Goldman Sachs 2,276 6 8.71
5 Bank of America Merrill Lynch (BAML) 2,086 9 7.98

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1 Citi 58,403.50 191 10.83%
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3 Bank of America Merrill Lynch 40,321.46 131 7.47%
4 Wells Fargo Securities 39,996.15 117 7.41%
5 Credit Suisse 37,748.55 119 7.00%