Wheel Pros released cleansing documents today, outlining a new money and refinancing deal struck with roughly 70% of its term loan lenders that will enhance the cash-strapped aftermarket wheel distributor's liquidity by around USD 180m and deleverage it by about USD 137m, according to two sources familiar with the matter. In documents filed to the broader lender group, the Clearlake Capital-backed company offered the remaining 30% of its loan holders the opportunity to participate in the deal pro rata, with the new money backstopped by term lenders already committed to the deal, they added.
The fresh capital is set to come via a USD 235m SOFR+ CSA+ 887.5bps (2.5% floor) FILO due February 2028 that will carry a second-out first lien on ABL priority collateral and a first lien on TL priority collateral, the sources noted.
Under the deal, existing lenders will also fund a new S+ CSA+ 450bps first lien TL due May 2028 to enable open market purchases of the current TL, including an 85 purchase price for lenders participating in the FILO and 60 for lenders not taking part in the FILO, the sources continued. The new first lien TL will be issued at a newly-created restricted subsidiary, with proceeds funneling down to Wheel Pros via an intercompany loan pari passu to the existing TL, the sources said. In addition, the new TL will carry a secured guarantee at the company pari passu to the existing TL via a double-dip structure with a second claim on the same collateral, they noted.
Also as part of the deal, unsecured notes that were held by certain existing lenders already committed to the deal were sold for new 6.5% second lien notes due May 2028 held at the new restricted subsidiary, the sources went on.
Wheel Pros cited forecasts that absent the deal, liquidity from cash and ABL availability would decline from USD 14m in 2Q23 to negative USD 23m by 1Q24, the sources noted. Pro-forma liquidity is now expected to decline from USD 173m in 2Q23 to USD 136m in 1Q24, they said.
Akin Gump and PJT Partners are advisors to the lenders, while the company has been working with Kirkland & Ellis and Houlihan Lokey.
Wheel Pros' existing USD 1.175bn Libor+ 450bps first lien TL due 2028 was last quoted 65.625/67.625, versus 66.019/68.433 at the start of the month, according to Markit. The term loan was quoted 70.116/72.313 on 1 May, prior to market fears that Wheel Pros could pursue a priming deal.
Its USD 365m 6.5% senior unsecured notes due 2029 last traded in size on 12 June at 33.75, according to MarketAxess. More recent odd lot trades have traded at a similar price.
A representative for Clearlake and Wheel Pros did not respond to requests for comment.