Shutterfly limits banks from selling new underwriter tranche below OID for six months

Shutterfly’s new credit agreement restricts lead banks Barclays and Citi from offloading stakes in their pro-rata, or underwriter tranche, below the loan’s OID of 95, according to two sources familiar with the matter. The restriction lasts six months into early April, the sources added.

The USD 225m Libor+ 650bps pro-rata term loan due 2026 was last quoted today at 95/95.5, one of the sources said.

The online photo products company priced its loan and bond package last week after postponing the syndication and multiple rounds of changes, as reported. Apollo also reportedly bought USD 300m of unsecured bonds to push the buyout over the line on 18 September. The banks funded the financing package for the buyout a week later on 25 September.

Along with the pro-rata term loan, the financing includes a USD 775m L+ 600bps institutional term loan due 2026 and USD 785m 8.5% senior secured bonds due 2026. The USD 775m L+ 600bps institutional term loan due 2026, which was syndicated, was last quoted today 95.083/96.083, according to Markit.

The restriction on banks selling out of the pro-rata tranche at a deeper discount is meant, in part, to buffer the institutional paper from also selling lower in sympathy, the sources noted.

The financing package backs Shutterfly’s approximately USD 2.7bn buyout by Apollo Global Management. Barclays launched the loan financing in early September, while the bonds launched a few weeks later. Both were originally slated to price on 20 September. The acquisition itself closed on Wednesday (25 September), according to a press release.

Shutterfly’s new bonds last traded today at 93.5 to yield 9.808%, down slightly compared to the pricing OID of 94.371 to yield 9.625%, according to MarketAxess.

Citi and Barclays declined to comment. Apollo did not respond to a request for comment.

2019 Debtwire

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