CLO Market Round-Up: Goodyear Tire Acquires Cooper; Steak 'n Shake Escapes Bankruptcy
In Trepp's weekly CLO market round-up, we recap daily TreppWire stories that highlighted these relevant articles. Last week, headlines revolved around acquisitions, bankruptcy proceedings, ratings changes, and more.
If you are interested in seeing the coverage of the CLO headlines in your inbox every morning, click here. Read below for the overview and see how these developments might impact leveraged loan prices.
Here, see a preview of the loans that faced the largest movement in prices last week. Find Trepp's full list, along with the managers who hold the largest exposure to each loan in the TreppCLO product.
Goodyear Tire Acquires Cooper for $2.5 Billion
Goodyear Tire & Rubber announced that it has acquired Cooper Tire & Rubber for approximately $2.5 billion. Both Goodyear and Cooper stock prices rose on the news, with investors seeing this as a positive development in the firms' attempt to re-take its market share from Chinese developers. Goodyear will pay $41.75 in cash per share and 0.907 Goodyear shares for every Cooper share held. The tire company believes it can add $165 million in deal synergies by streamlining its operations with Cooper.
Goodyear is represented in the CLO universe with the $1.2 billion Goodyear Tire & Rubber Company – Term Loan (L+200; due 2025). The facility was held by over 55 CLO vehicles in December, or approximately 6% of all US deals in Trepp's CLO database.
The facility generated a few “sell” trades last summer in the low $90s range. Since that transaction, its price has continued to rise. The last trade took place in December when it was bought in the high $90s range. IHS Markit quoted it this week at slightly under par.
Steak 'n Shake Escapes Bankruptcy; Files Litigation Against Lender
Recently, the Trepp team reported that Steak ‘n Shake would likely file for Chapter 11 bankruptcy to manage the firm’s debt load. Most notably, the fast-food company was on the hook for the $220 million Steak N Shake Operations - Term Loan that was due to mature this month and carried a rate of L+375.
Zero Hedge reports that the company avoided a bankruptcy filing by repaying its loan on Friday, February 19th. Additionally, the firm followed up its repayment by suing the lender Fortress Investment Group for attempting to take over the company.
Steak 'n Shake stated that Fortress had expressed an interest in part of the company’s real estate portfolio but that the two parties were unable to reach an agreement with Fortress allegedly repeatedly changing the terms of the offer. The burger company claims that Fortress then went out and acquired its debt on the secondary markets, driving its debt rates higher and complicating its ability to pay outstanding loans. Steak ‘n Shake claimed that upon acquiring the debt, Fortress threatened to force the company into bankruptcy, which would have allowed them to then take ownership.
According to the legal filings, Steak ‘n Shake paid $102 million to repurchase the loans held by Fortress and other lenders.
Moody's Announces Changes To Quimper's Ratings
Moody's changed the outlook on Nordic building products distributor Quimper AB's (Ahlsell) ratings to 'stable' from 'negative' and has downgraded the instrument ratings on senior secured first lien credit facilities to 'B2' from 'B1.' The move follows the proposed amended and upsized term loan B and a SEK 2.25 billion senior secured revolving credit facility.
The firm is represented in the CLO Universe with one dollar-denominated and two Euro-denominated credits including the $98 million Quimper - Quimper (Ahlsell) 2nd Lien Term Loan (L+825; due 2027), the €1.6 billion Quimper - Term Loan B (E+400; due 2026), and the €305 million Quimper - Second Lien Term Loan (E+825; due 2027). The dollar-denominated facility was held by just three CLO vehicles in January as per Trepp 's CLO database. IHS Markit quoted the credit at a notch above par this week.
Both Euro-denominated facilities saw a dip in their quoted price in March but later rebounded. The two credits were quoted above par this week by IHS Markit.
The first and second facilities was held by about 160 vehicles and 30 in January, or at 61% and 11%, respectively, of all EU deals in Trepp's CLO database.
Pitney Bowes Issues Term Loan – Redeems 2021 Notes
Pitney Bowes announced a redemption of its outstanding 3.375% notes due 2021. The notes will be redeemed at par. The commerce solutions and financial services of Pitney Bowes is represented in the CLO Universe by two credits – the $850 million Pitney Bowes Inc – Term Loan B (L+550; due 2025) and the $400 million Pitney Bowes Inc – Term Loan A (L+175; due 2024).
The first facility was held by over 105 CLO vehicles in December, slightly more than 10% of all US deals in Trepp's CLO database. The second facility was only held by two CLO vehicles in December.
The first facility was actively traded throughout 2020 and has seen steady activity in 2021. While in 2020, the facility was mostly purchased, its trades so far this year have only been “sell” trades, priced at par. Both credits were priced at around par by IHS Markit.
General Pricing Data
Issuance in the CLO market rose as 30 deals priced last week, up from 23 the week prior. There were seven new, fourteen refi, eight reset deals, and one infra deal. 17 deals were sourced from the US Market while the rest were sourced in the EU.
The best new execution in the US market was the $647.48 million RR 15, which featured a AAA class at L+110. The deal is managed by Redding Ridge and arranged by Barclays.
The information provided is based on information generally available to the public from sources believed to be reliable.
Originally published in TreppWire, which is distributed every morning as a client-only email newsletter. TreppWire enables readers to stay up-to-date on market activity, while providing a competitive advantage over others. TreppWire leverages Trepp’s market expertise and proprietary data sets to provide daily market commentary, trend analysis, research, and breaking news to its clients