Actionable Ideas for Companies and Sponsors
Return of Portability Transactions to the Syndicated Loan Market
After remaining dormant since June 2019, the syndicated loan market has seen the return of portability features to loan transactions. Portability features allow existing loans to stay in place if certain conditions are met when a company is sold, thereby reducing the need for new financing and avoiding repayment of the existing loans. Not only does portable financing allow for the capital structure to move with a new buyer, they often are done in conjunction with dividend recaps by the current owner to realize returns ahead of a sale.
Four leveraged loan deals have recently launched with portability features, spanning a broad range of companies, including: the $2.3 billion dividend recap for Epicor (an application software provider); the $740 million dividend recap for ECi Software (an ERP solutions provider); the $2.7 billion dividend recap RCN Grande/Radiate Holdco (a broadband and cable TV services provider); and the $950 million dividend recap for EFS Cogen (a cogeneration power plant operator).