Final terms and tranching are out on the upsized, $6.96 billion-equivalent cross-border loan backing the buyout of McAfee LLC. Recommitments are due by 4 p.m. U.K. time/11 a.m. ET, for allocations thereafter via a J.P. Morgan-led group.
Today's update brings a $300 million increase across both tranches that will be used to decrease a simultaneous offering of unsecured notes to $2.02 billion. This follows an earlier upsizing of $1 billion in aggregate that replaces a previously planned offering of secured notes and leaves the deal structured as follows:
* $5.16 billion seven-year term loan B, priced at 400 basis points over the secured overnight financing rate, with a credit adjustment spread of 10 bps and a 0.5% floor offered at 99.5, versus $4.41 billion at Sofr+CSA+375-400, with a 0.5% floor at 99.5 at launch
* $1.8 billion-equivalent seven-year TLB at E+425, with a 0% floor offered at 99.5, versus $1.25 billion-equivalent at E+400-425, 0%, 99.5 at launch
Terms suggest a yield of 4.67% on the dollars and 4.41% on the euros. The dollars come with one 25 bps margin step down starting at 5x first lien net leverage, while the euros feature two steps of 25 bps at 5x and 4.5x first lien net leverage. Previously, the dollars featured two step downs, and the euros featured three step downs. There is a 25 bps margin step down on both tranches on completion of an IPO as well as six months of soft call protection at 101.
Ticking fees have been added to the deal and start at 50% of the margin from day 46, moving to the full margin from day 91. Syndication has also brought various other documentation changes.
The upsizing does not impact ratings, banks said, which have emerged at B-/B3 (corporate) and B-/B2 (issue), with a 3 recovery rating. The issuer is Condor Merger Sub.
Proceeds support the $26 per share take-private of McAfee by an investor group led by Advent and Permira that also includes Crosspoint Capital Partners, Canada Pension Plan Investment Board, GIC and a wholly owned subsidiary of the Abu Dhabi Investment Authority.
The deal values the consumer digital protection software group at more than $14 billion including debt. Marketing of the eight-year unsecured bond that also supports the buyout got underway on a Feb. 1 investor call via a BofA Securities-led group. A $1 billion revolver rounds out the debt.
J.P. Morgan, BofA Securities, Credit Suisse, Barclays, Citi, HSBC, RBC, UBS, BMO Capital Markets, KKR Capital Markets, Macquarie, Mizuho, MUFG, Nomura, Wells Fargo, BNP Paribas, CIBC, Citizens Bank, Credit Agricole CIB, Fifth Third, Intesa Sanpaolo, KeyBanc, Natixis, Societe Generale CIB, Standard Chartered, Stifel Nicolaus, SMBC, TD Securities and ScotiaBank make up the full arranger group on the loan.
McAfee provides cybersecurity software and services with products covering antivirus, identity and privacy protection.
