October 20, 2017 / 4:51 PM / 2 months ago

LPC: Intralinks LBO backed by US$650m loan package

NEW YORK, Oct 20 (Reuters) - Private equity firm Siris Capital Partners has lined up US$650m of loans to finance its roughly US$1bn buyout of US cloud collaboration and virtual data room software provider Intralinks Holdings from US mobile cloud services company Synchronoss Technologies Inc, according to two sources familiar with the matter.

Intralinks is well-known in the syndicated loan market. The software is widely used by banks to distribute information on loans to investors and manage time-sensitive information such as investor commitments. Synchronoss stands to make a roughly 14% pre-tax return on its investment, based on the US$977m purchase price Siris is paying.

The sale, announced on October 17, comes less than a year after publicly traded Synchronoss purchased Intralinks in January for an equity value of US$821m, which translated to an enterprise value of around US$855m, including about US$34m of net debt.

The financing will include a US$450m secured loan with a first priority claim due in 2024 and a US$150m secured loan with a second priority claim due in 2025, the sources said. A US$50m five-year revolving credit facility will be undrawn at close.

RBC Capital Markets, Golub Capital and Macquarie Capital are providing the debt, according to company filings. RBC will lead marketing for both tranches, the sources said.

Syndication is slated to launch next week, one of the sources said.

RBC, Golub, Siris and Synchronoss did not respond to requests for comment. Macquarie declined to comment.

Indicative price talk on the first-lien loan is in the 400bp-425bp over Libor range with a 1% Libor floor and 99 original issue discount (OID), one of the sources said. The second-lien loan will be guided in the 800bp-825bp over Libor range with a 1% Libor floor and 99 OID.

The debt will bring Intralink’s leverage to 4.0 times through the first-lien and 5.3 times total, based on US$113m of adjusted Ebitda, or earnings before interest, taxes, depreciation and amortization, at June 30.

Siris is contributing roughly US$440m in equity, for 42% of capitalization.

As part of the transaction, Siris will make a potential contingent payment to Synchronoss of up to US$25m and invest US$185m in convertible preferred stock of the legacy company, for a nearly 20% stake. The buyout shop is currently Synchronoss’ largest shareholder.

Siris in June offered to buy Synchronoss for an equity value of about US$835m, which would have equaled a roughly US$1.7bn enterprise value including the company’s US$861m in net debt, but pulled its offer in September.

Synchronoss in June alerted lenders it would need to restate earnings for 2015 and 2016 due to accounting errors related to licensing deals, which has delayed release of its financials for the quarter ending March 31. In July, Synchronoss said it was undergoing a strategic review.

The company also in July secured an amendment from lenders to extend the deadline for filing its 1Q17 10-Q to avoid a potential default.

Siris and Synchronoss resumed talks earlier this month for a potenital deal that valued Intralinks at up to US$915m and included a US$185m convertible preferred equity stake in the legacy company, filings show. (Reported by Andrew Berlin; Edited by Lynn Adler, Michelle Sierra)

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