(Corrects paragraph one to reflect private debt commitments instead of a syndicated loan; corrects throughout)
By Aaron Weinman
NEW YORK, July 30 (LPC) - Irish software firm ION Group secured private debt commitments in mid July to fund its acquisition of financial media and data firm Acuris, people familiar with the matter said.
ION Group turned to the private debt market to fund the Acuris buy after failing twice to raise leveraged loans in the broadly-syndicated loan market earlier this year.
ION Group agreed to buy a majority stake in Acuris from BC Partners in March for £1.35bn (US$1.69bn), including debt, and was seeking US$1bn-US$1.1bn of debt financing, sources said.
Investors opposed various terms on ION Group's previous two loans due to high leverage, which has climbed in the last 12 months after several acquisitions.
Adjusted leverage was approximately 9.5 times for the 12 months ended in September 19, according to Moody's Investors Service.
ION was also reluctant to sweeten the terms on debt that it tried to raise in the broadly-syndicated loan market, sources said.
Aggressive documentation and Ebitda adjustments have also drawn greater scrutiny from investors, who were calling for higher compensation and tighter documents.
“The documents were dreadful, I wouldn’t give them (ION Group) that much flexibility,” a senior investor said of broadly-syndicated loan documents for ION Group.
Private and direct lenders, which typically lend at higher interest rates, are proving more receptive to challenging credits than regulated banks this year.
This was seen recently in recent European buyouts of Spanish frozen fish producer Iberconsa and German chemicals group Evonik’s methacrylates plastics unit, Madrid
ION Group was not immediately available for comment.
ION Group has already tried to tap the syndicated loan market twice for acquisition loans this year, with little success.
The firm, founded by businessman and former bond trader Andrea Pignataro, attempted to raise a €310m (US$345.4m) leveraged loan in March for one of its software units Openlink, to fund the acquisition of cloud-based firms Reval and Aspect.
That deal, which was underwritten by UBS, was withdrawn in April when it was rolled into a bigger financing.
ION Group created a subsidiary, ION Corporates, to combine its software businesses OpenLink, Allegro, TriplePoint and Wall Street Systems and approached the market in April for a roughly US$2.2bn loan, that was also run by UBS.
Investors pushed back on the deal terms. The transaction was reduced to approximately US$1.96bn and ION abandoned plans to take a US$250m dividend and made other changes to the spread and documentation.
By May, the deal had not gathered sufficient investor support and was withdrawn, with no plans to re-launch, sources said.
“When you’re not getting a whole lot of traction, and not willing to bend, you’re in between a rock and a hard place,” an investment manager said.
One of the company’s units, banking software firm Wall Street Systems, then raised US$450m in first-lien term loan debt in May in another deal arranged by UBS, according to Refinitiv LPC data.
ION Group’s new financing for Acuris comes as investors are more wary about credit as the end of the cycle approaches, and are calling for greater debt reduction.
“(ION) is going to have to come back to the market. But I’d like to see them pay off some debt once in a while,” a portfolio manager said. (Reporting by Aaron Weinman. Editing by Tessa Walsh)