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In another sign of how risk-averse investors have become, Brightspeed has withdrawn a proposed leveraged loan and high-yield bond package in connection with Apollo Global Management’s acquisition of the incumbent local exchange carrier (ILEC) assets of Lumen Technologies, “in light of market conditions,” according to a company statement.
The acquisition is still expected to close in early October using an equity contribution from Apollo and proceeds from the committed financing obtained at the time of deal announcement, the statement notes.
The debt comprised a $1.865 billion offering of seven-year (non-call three) senior secured notes, and a $2 billion, seven-year term loan B. Initial price thoughts for the bonds were tipped with a 10% yield, inclusive of an original-issue discount, while price talk for the loan of Sofr+CSA+500, with a 0.5% floor and an OID of 92, indicated a steep yield to maturity of 10.63%.
Secured debt ratings were assigned at B-/B2, with a 3 recovery rating from S&P Global Ratings. Corporate ratings are B-/B3, with negative and stable outlooks. Connect Holdings II Inc. was the issuing entity for the debt.
Lumen (NYSE: LUMN) announced in August that it agreed to sell the ILEC assets in 20 midwest and southeast US states to Apollo for $7.5 billion, including the assumption of roughly $1.4 billion of debt. The acquired business will operate as Brightspeed, which is headquartered in Charlotte, N.C., and which provides broadband and telecommunications services. Lumen will retain ILEC assets in 16 states as well as its national fiber routes and competitive local exchange carrier networks.
“The withdrawal of the announced debt financing package is not expected to impact Brightspeed's business, employees or customers,” the company said in the Sept. 29 statement. “Brightspeed expects to commence a debt financing transaction at some point in the future.”
This article originally appeared on PitchBook News