Refinitiv looks to slash costs on US $6.45 billion loan a year after record buyout
By Aaron Weinman NEW YORK (LPC) - Financial data and content services provider Refinitiv on Thursday returned to the loan market looking to reprice roughly US$6.45 billion (£5.03 billion) in debt, just four months after the company agreed to a US$27bn acquisition by the London Stock Exchange Group (LSE), sources familiar with the matter said. The term loan is one part of Refinitiv’s US$12.825bn bond and loan financing that backed private equity firm Blackstone Group’s buyout of the company, formerly Thomson Reuters’ Financial & Risk business, in September 2018. The transaction is one of the largest leveraged buyouts since the financial crisis
By Aaron Weinman
NEW YORK (LPC) - Financial data and content services provider Refinitiv on Thursday returned to the loan market looking to reprice roughly US$6.45 billion (£5.03 billion) in debt, just four months after the company agreed to a US$27bn acquisition by the London Stock Exchange Group (LSE), sources familiar with the matter said.
The term loan is one part of Refinitiv’s US$12.825bn bond and loan financing that backed private equity firm Blackstone Group’s buyout of the company, formerly Thomson Reuters’ Financial & Risk business, in September 2018. The transaction is one of the largest leveraged buyouts since the financial crisis.
Refinitiv’s repricing comes on the back of robust trading in its bonds and loans in the secondary market as investors welcomed the potential acquisition of the company by the publicly traded LSE.
“Investors view Refinitiv as a much better credit given the announcement from the LSE. A lot of the concerns around the financing from Blackstone have settled too,” said one investor with knowledge of the transaction. “The concerns are not the business, but the loan documents, sponsor risk and high leverage.
”When Refinitiv launched its financing in September last year, the documentation was criticized for including some of the weakest investor protections seen since the financial crisis such as Ebitda add-backs based on projected cost savings. Adjusted total leverage on a pro forma basis was estimated at 5.3 times when the financing was in market, but Moody's Investors Service estimated pro forma total leverage of about 7.6 times at the end of June 2018.
Fourteen months on, Refinitiv is shopping the term loan B at a rate of 325bp-350bp over Libor, a move that could lower the interest rate on the loan by up to 50bp from 375bp over Libor, the sources said. Bank of America is arranging the transaction. Lenders have until December 17 to join the deal.
A Bank of America spokesperson did not return a telephone call or email seeking comment. A spokesperson for Refinitiv declined to comment.
Refinitiv is one of more than a dozen US borrowers looking to cut costs on their existing loans this month. Companies higher up the credit ratings spectrum are taking advantage of investor demand for the safer haven of Double-B rated debt, as uncertainty lingers over the US-China trade war and a slowdown in global growth.
While several companies are using their stronger, Double-B credit ratings to leverage investors’ flight to quality, the Single-B rated Refinitiv comes to market on the back of positive momentum after the LSE announcement.
“Given the existing pricing on the loans, I expected a repricing of the dollars,” a second investor said.
On Wednesday, Refinitiv’s term loan, which matures in 2025, dropped to an average bid of 100.25 from 101 after speculation of a repricing emerged, sources said. Bank of America hosted the lender call on Thursday morning.
The company’s senior unsecured bonds, due in 2026, have also rallied to a cash price of 113 cents this month, after hitting a low of 91.1 cents on the dollar in December 2018, according to MarketAxess data. The secured bonds, also maturing in 2026, are now at 109.375 cents this month, compared to a low of 96.265 a year ago.
The LSE, meanwhile, is supporting the purchase of Refinitiv from Blackstone with US$9.325bn and €3.58bn (US$4bn) in bridge loans.
In September 2018, Refinitiv raised US$9.25bn in term loans to back Blackstone’s US$20bn purchase of a 55% stake in the company from Thomson Reuters. This comprised a US$6.5bn seven-year term loan and a US$2.75bn-equivalent seven-year loan in euros.
Refinitiv also raised US$2.825bn in bonds.
LPC is owned by Refinitiv.
(Reporting by Aaron Weinman; Editing by Michelle Sierra and Kristen Haunss)
This story has not been edited by Firstpost staff and is generated by auto-feed.
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