Service King loan moves up on slowing cash burn, ahead of coupon payment this week

Service King’s term loan ticked up today after the company last night provided an update detailing improving cash flow trends over the last few months, according to two sources following the situation.

Meanwhile, the collision repair center operator is on watch for whether it will make a USD 14.8m coupon payment due 1 October to holders of its unsecured bonds. In April, it initially withheld the interest payment before ultimately paying it within the 30-day grace period.

Its USD 600m Libor+ 275bps (1% floor) first lien term loan due August 2021 is quoted today in the 93.625/96.375 context, up from quotes at 92.542/94.736 yesterday (28 September), according to Markit. The company also has a fully tapped USD 100m revolver due August 2021.

The company’s USD 375m 7.875% senior unsecured notes due 2022 last traded in size at 82.5 on 10 September, up from 78.25 on the heels of the August earnings report, according to MarketAxess.

The Blackstone and Carlyle-owned company’s monthly cash burn contracted to USD 0.2m in August, from a USD 6.8m burn in July and a USD 10.6m burn in June, the sources said.

Out of a go-forward 338 stores, 292 stores are now open, one of the sources said. The company also disclosed that LTM adjusted EBITDA as of February, before the pandemic-related closures, was USD 139.4m. Its “COVID-19 adjusted” LTM EBITDA as of 30 June was roughly in line with that, at USD 140m.

As of 30 June, the company posted USD 61.2m of adjusted LTM EBITDA, before COVID-19 addbacks, as reported.

On an unadjusted basis, leverage balloons to 11.7x through the first lien and 17.8x total through roughly USD 1.09bn of total debt. Giving credit for a total USD 78.8m of addbacks, leverage is 5.1x through the first lien and 7.8x total.

Service King did not respond to a request for comment. Blackstone and Carlyle did not respond to requests for comment.

2020 Debtwire

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