Truck Hero last week released strong preliminary results through September, prompting speculation that the truck accessories manufacturer could soon come to market with a deal to take out its pricey 8.5% first lien notes, said three sources familiar with the situation.
The USD 335m 8.5% first lien notes due 2024 are subject to a make-whole premium at T+ 50bps until April 2021, after which the bond is callable at 104.75. If Truck Hero were to exercise the make-whole on the notes now, it would pay roughly 108.75, one of the sources and an additional source familiar noted.
The notes last traded in size at 106.75 to yield 2.936% yesterday, up from trades at 106 to yield 4.872% on 19 October prior to the pre-earnings report, according to MarketAxess. Its USD 863m Libor+ 375bps term loan due 2024 is, meanwhile, quoted 97.813/98.813 today, up slightly from 97.275/98.363 on 5 November, according to Markit.
Based on the existing bond trading levels, sources said it would make sense for the company to pay the make-whole right now and make the difference back with a lower coupon over the next few years. It would also give Truck Hero the opportunity to extend the maturity, they noted.
For the nine-month period ended 30 September, the CCMP Capital-owned company booked USD 912.3m in revenue, up from USD 814m for the same period last year, the sources said. Adjusted EBITDA during this time totaled USD 211.7m, compared to USD 173m last year, they added.
Based on the flash numbers, sources calculated adjusted EBITDA for 3Q20 amounted to roughly USD 93.6m, marking a drastic improvement from the USD 57.8m recorded in 3Q19.
As of 30 September, leverage stood at 4.4x with USD 296.8m in LTM adjusted EBITDA and USD 1.3bn of total debt.
A spokesperson from CCMP declined to comment.