Small allocations on Serena Software's $400 million term loan drove up pricing on its break in the secondary market last week. The Lehman Brothers-led deal broke at 101 1/2. A dealer said trading volume was high on the break and that agents on the name were making tight markets. Another trader explained that allocations were small because the deal was four times oversubscribed. "It definitely drove the price up and generated more velocity in the trading of the loan on the break," he said.
The deal will be used to finance the $1.3 billion leveraged buyout of Serena by Spyglass Merger Corp., a newly formed entity, which will buy all of the outstanding shares of Serena. The LBO financing also consists of $225 million of senior subordinated notes; a $349 million cash equity investment from private equity sponsor, Silver Lake Partners; and $154 million rollover equity from the company's founder and chairman, Douglas Troxel, according to a Moody's Investors Service report.
Moody's assigned a B1 rating to the term loan and B2 corporate family rating to the software provider. A Serena spokesperson did not return calls.