Deutsche Bank Offloads $425 Million Loan for Fonts Maker Buyout
(Bloomberg) -- A group of lenders led by Deutsche Bank Group AG has managed to offload a $425 million loan for the buyout of type-font designer Monotype Imaging Holdings Inc. after laboring for weeks to find buyers, according to people familiar with the matter.
The debt is among the more than $2 billion of loans to highly indebted companies that underwriters were forced to fund with their own cash in recent months as investors stepped back from riskier deals.
The Monotype loan, which supports private equity firm HGGC’s take-private of the owner of popular fonts such as Times New Roman and Helvetica, was fully syndicated at a discount of 94 cents on the dollar on Friday, according to the people, who asked not to be named because the details are private.
That’s the third-steepest discount offered on a U.S. leveraged loan this year, according to data compiled by Bloomberg. Similarly rated first-lien loans have cleared the market at an average price of 98.32 so far in October, according to the data.
A representative for Deutsche Bank declined to comment.
Deutsche’s struggle was relatively short-lived compared to some other cases where lenders have been left on the hook. Banks involved in at least two other recent struggling buyout financings agreed not to offer the debt to investors below a threshold of 95 cents on the dollar and are still stuck with it.
Yet several tweaks to Monotype’s structure, covenants and pricing were needed to get the deal over the line.
The size of the first-lien loan was cut to $425 million from $440 million and pricing was sweetened three times. Deutsche ultimately sold the debt with a spread of 5.5 percentage points over the Libor benchmark.
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