August 11, 2014 / 12:36 PM / 4 years ago

Lowell bonds jump on Teachers' bid

LONDON, Aug 11 (IFR) - Lowell Group’s £115m 5 non-call 2 bond issued in early March jumped up by 1.5 points on Monday on the back of the news that Ontario Teachers’ Pension Plan, via its private capital division, is to acquire a significant minority interest in the company.

According to Tradeweb, the bond was quoted at a mid price of 99.25 mid morning.

Helped by strong sentiment in the high-yield market, Lowell priced the 5NC2 issue with a 5.875% coupon, almost half what it paid on its debut bond in 2012, despite offering investor weaker covenants.

Unlike Lowell’s previous deal, the new bond included a portability clause, which allow financing to remain in place if the business is sold, while the equity claw was upped from 35% to 40%. The portability test requires a debt-to-estimated remaining collections ratio of around 60%.

Lowell Group’s current investors will remain shareholders and will each sell a proportionate amount of their current holdings. The consumer debt purchase and recovery group was acquired by TDR from Exponent in September 2011.

According to Lowell’s second quarter interim results released on May 22, collections in the second quarter totalled £172m which represented a 12% year-on-year increase, while EBITDA grew 8% year-on-year from £108m to £117m.

Lowell paid a double-digit yield to access the market for the first time in March 2012, pricing a £200m 7NC3 bond at par to yield 10.75%. The company tapped the deal for £75m in January 2013, printing at 109.5 to yield 8.429%. (Reporting by Helene Durand, Editing by Alex Chambers, Anil Mayre)

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