North America Mid-Market Loan: Big Ass Solutions' US$250m acquisition loan

IFR Awards 2018
3 min read
Jonathan Schwarzberg

Big Ass turns heads

IFR’s mid-market loan of the year raised a lot of eyebrows, and not just because of the name. While the name might make some blush, there was nothing blush-worthy about the execution of the US$250m term loan backing private equity firm Lindsay Goldberg’s buyout of fan maker Big Ass Solutions.

The transaction was notable in that not only was it a US$250m covenant-lite term loan for a fan maker with less than US$50m of Ebitda, but it also had an order book of 61 accounts, providing ample liquidity for a middle-market deal.

“It was four to five times oversubscribed,” said Jeff Cohen, global head of leveraged finance capital markets at Credit Suisse. “It really shows what services we can deliver to a middle-market sponsor. They would never have come anywhere close to this execution doing a clubbed-up deal or doing a unitranche with direct lenders.”

The five-year term loan was launched in October 2017 and closed on November 21 2017. Pricing opened in the 475bp–500bp over Libor range, but strong demand built for the book as Credit Suisse went out to its roster of investors, allowing the issuer to drop pricing on the loan to 425bp.

In the end, the book had a total of just over US$1bn in commitments. The deal also included a US$40m revolving credit facility and a US$30m subordinated sellers note.

Not only that, the loan traded well enough that Big Ass Solutions was able to return to the market in June 2018 and cut pricing further to 375bp over Libor. The repriced loan continues to remain above par.

Credit Suisse has really carved out a niche for itself in serving middle-market sponsors. The volume that it does has assisted the bank with bigger deals, the bankers said, giving the company a feel for the market that other banks not as active may not have.

“We might not make as much of a fee because it’s a smaller deal,” Cohen said. “But it just allows us to have more information, more flow with our investors, more knowledge about where the market is, where investors care and how to keep pressure points on successful syndication. We like doing these middle-market transactions.”

Big Ass manufactures fans, lights and controls for industrial, agricultural, commercial and residential use. The company’s headquarters are in Lexington, Kentucky, with additional offices in Australia, Malaysia, Singapore, and Canada.

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