Wachovia Securities is returning to market with a new $76 million add-on "C" loan for NEP Supershooters that buysiders said should coast despite a rough time when the provider of outsourced media services tapped the market last May. The credit was originally put in place to back the acquisition of the company by Apax Partners and Spectrum Equity Investors from Wachovia Capital Partners.
During the last syndication the purchase price was reduced and the bank loan got reworked. "They were a new issuer going to market and they weren't hitting numbers that they had already committed to hit. I'm sure from the point of view of bankers there were certain credit metrics that they thought they needed to get the deal done," explained Christina Padgett, v.p. senior credit officer with Moody's Investors Service.
But since then investors have become more comfortable with the name. "The company has preformed reasonably well," a portfolio manager noted. "I got the impression that they would have no problem," a source familiar with the transaction said.
Proceeds from the "C" loan and a $4.3 million preferred stock investment will be used to finance the purchase of mobile production assets and contracts from National Mobile Television (NMT) and the Outside Broadcast Division of the U.K.'s The Television Corp. "We've always planned to grow the company and do acquisitions and these two acquisitions came up shortly after the initial deal and we put the facility in place to help finance those acquisitions," said Kevin Brown, an investment professional with Apax. He declined comment on the previous syndication. "We've been happy with company's performance since we bought it," he said.
Through guidance from lead arranger Wachovia, the sponsor chose to use bank debt for the acquisition. "We determined that [the 'C' loan] was the most efficient way to finance the acquisition," Brown said. "We think the bank market will be willing to support the acquisitions and support the company in its growth strategy."
The existing credit comprises a $20 million revolver at LIBOR plus 3 1/2%, a $135 million first-lien "B" loan at LIBOR plus 4% and a $25 million second-lien term loan at LIBOR plus 8%. The company is also looking to take pricing down to LIBOR plus 3 1/2% with the add-on, the portfolio manager said. It could not be determined if the new spread would be just for the add-on or for the entire deal. "We're hoping that we can get what is market pricing for a deal of this nature," Brown said. Randy Henderson, general partner and cfo with Spectrum, and Wachovia bankers did not return calls.