Parts Authority Inc. has completed its $600 million, seven-year covenant-lite first-lien term loan tight to talk at pricing of L+400, with a 1% Libor floor and an original issue discount, or OID, of 99.25 via lead arrangers Jefferies and Golub Capital, according to sources. There is one 25 bps leverage-based pricing step-down and one 25 bps IPO-based step-down. Proceeds will be used to finance the acquisition of majority stake in the business by Kohlberg & Co. Existing sponsor The Jordan Co. will retain an ownership position as will company management. Financing includes a $200 million, eight-year second-lien term loan that is being privately placed. The Carlyle Group is administrative agent on the second-lien loan. Financing also includes a $125 million, five-year asset-based revolver with a springing fixed-charge coverage covenant. Parts Authority, based in Lake Success, N.Y., is an automotive aftermarket replacement-parts distribution platform serving the do-it-for-me and do-it-yourself e-commerce segments of the automotive aftermarket. Terms:
| Borrower | Parts Authority (PAI Holdco Inc.) |
| Issue | $600 million first-lien term loan |
| UoP | LBO |
| Spread | L+400 |
| LIBOR floor | 1.00% |
| Price | 99.25 |
| Tenor | 7-year |
| YTM | 5.23% |
| Four-year yield | 5.32% |
| Call protection | 101 soft call for six months |
| Corporate ratings | B/B2 |
| Facility ratings | B/B1 |
| Recovery ratings | 3 |
| Financial covenants | None |
| Arrangers | Jeff/Golub |
| Admin agent | Jeff |
| Px Talk | L+425/1%/98.5-99 |
| Sponsor | Kohlberg & Co. |
| Notes | Includes 25 bps step-down at 4.25x net first-lien leverage and 25 bps IPO step-down. |
Article amended at 4:45 p.m. ET on Nov. 5, 2020, to add second-lien agent.