Demand for some sterling deals in the European leveraged finance markets has started to weaken as investors worry about the effects on the UK economy of its separation from the European Union.
But on Wednesday, Vetcare launched a £141.5m extension of its £180m seven year term loan ‘B’. It seeks the same margin of 450bp over Libor it achieved for the old loan in January, when it was acquired by EQT from Summit Partners. It has a 0% floor and was sold at 99.50.
The original financial package for the LBO comprised this £180m term loan and a €60m revolving credit facility, both due 2024. There also was a second revolving credit facility of €10m due 2023. The revolvers pay both 425bp over Euribor.
Bank of Ireland, HSBC, Royal Bank of Scotland, SEB and SMBC arranged the old term loan ‘B’. The add-on has SMBC as a sole bookrunner.
This is third time Vetcare has engaged with loan investors since January. In April, it sold a £132m-equivalent term loan ‘B’ add-on for the merger with fellow EQT portfolio company Evidensia, which was priced with a margin of 375bp over Euribor.
UK OK?
Vetcare’s new loan add-on comes amid signs of worry for the prospects of the UK economy among leveraged finance investors.
In the leveraged loan market, UK health retailer, Holland & Barrett, has cut £100m-equivalent from the £550m term loan and added it to a €275m-equivalent term loan. Pricing was widened and the commitments deadline was extended (see separate story).
In the high yield bond market, New Look, the UK fashion retailer saw its bonds trading down after negative quarterly results. On Wednesday, one high yield bond trader said he saw a 10% fall in the price of New Look’s outstanding bonds.
Ratings of New Look’s £1.2bn-equivalent bonds were downgraded from B- to CCC by S&P in June. The decision followed a downgrade from Caa1 to Caa2 by Moody’s in February.