Loans backing Infor Global Solutions were sharply higher Friday amid speculation that the debt will be refinanced in connection with Golden Gate Capital’s planned merger of its Infor Global and Lawson Software portfolio companies, according to sources.
The proposed transaction was disclosed on Friday as Lawson said holders of its 11.5% notes due 2018 are being given the option of waiving the change-of-control provision in exchange for a consent payment, and thus remaining invested in the new combined entity, or relinquishing paper at the typical 101 put price. The statement from Lawson does not address whether the proposed transaction would trigger a change of control at Infor; however, based on the trading levels of Infor’s loans today, the market appears to be speculating that the sponsor will seek to address Infor’s upcoming debt maturities and complex capital structure in connection with the proposed merger.
In the secondary market, Infor’s PIK loan soared about 20 points, to 91/93, while the issuer’s various second-lien tranches advanced to a 97.5/99 context, versus bids at 91-93 yesterday morning, according to sources. The old extended first-lien term loan ticked up to 99/99.75, from 98.25/99.25 yesterday.
In a statement, Lawson disclosed that Infor and Lawson will merge into a new Cayman Islands exempted-company dubbed ComboCo. Additional details around that transaction are not yet available, but there are rumors that the proposed transaction will involve a large bond-and-loan financing, with Bank of America Merrill Lynch as left lead, sources said.
The takeover would trigger a typical change-of-control provision in the senior notes; however, the put price, at 101, is out of the money with the B-/Caa1 paper marked at 106, according to S&P Capital IQ.
Regardless, the company has reached out to investors on two angles. For one, Lawson is offering to buy back the notes at the 101 change-of-control-put price. But separately, the company is offering investors the opportunity to waive the provision and receive a 37.5 bps consent payment. Lawson has retained BAML as the solicitation agent in connection with the consent solicitation.
As reported, Golden Gate in July acquired Lawson Software in a $2 billion deal, at the time merging Lawson with SoftBrands, a business it previously owned. Infor at the time made an investment in Lawson, and the two companies now operate under a shared service agreement.
In connection with that transaction, the company issued the $560 million issue of 11.5% senior notes due 2018, which priced at 92.143, to yield 13.25%, as well as a $1.115 billion senior-secured loan package split between a $1.04 billion term loan and a $75 million revolving credit. The term loan cleared the market at L+525, with a 1.5% LIBOR floor. It was issued at 96, though has since advanced to a par-plus market.
Credit Suisse, Bank of America Merrill Lynch, Morgan Stanley, Royal Bank of Canada and Deutsche Bank arranged the loan. The same group acted as joint bookrunners on the bonds, with BAML as left lead. (For more details, see Lawson/SoftBrands: Deal Postmortem, LCD News, July 14, 2011).
J.P. Morgan is administrative agent on Infor’s existing loans.
Lawson is rated B/B2, while Infor is rated B-/Caa1.
Lawson, an Infor affiliate, has more than 4,500 customers worldwide, primarily in specific services, trade and manufacturing/distribution industries. – Kerry Kantin/Matt Fuller