$150m (22.5m) sen unsec cb coming tonight from MER. Terms: 6yr, 4-4.5% up 35-40%, H/C 4 yrs, no puts, full pctns. UOP = acq/gcp ¾ of FY12 rev came from google (search engine advertising) so co wants to diversify going forward (bought Tax Act in 2012).
LTM EBITDA = 67m
FCF 45m
PF Cash = 308m
Debt = 224m (term loan + cb)
Leverage = 3.3x
We’d assume B rating and L+600. ADV = 337, no leps, 2yr 90d 10/50ile = 34/42, we’d discount to 35 vol. Theo = 102.75. Another very doable small deal but we do not like hard call component. 675m mkt cap/low ADV/v tight credit mkt = model trap 4 h/fs. Nice coupon vs zero div so may see some x/over demand. Have seen a lot of recent value destruction w/skewed demand in order books. This one not so obvious but mkt wants credit.
Internet search business & online tax preparation business (formerly Infospace)
BCOR is on a mission to expand beyond their search business. Early 2012 they acq Tax act for $288m cash, using avail cash and bank line. Bank line has $10m rev (nothing currently out) & $74m remaining on term loan due 2017 (L+300 to 450, secured by tax biz). Tax biz very seasonal, but profitable, 15% of HY 12 rev. Search biz growing, but hightly concentrated with Google accounting for 77% of FY12 revenue. Looking for add’l tech or internet-related acq. Approved $50m stock buyback last month
L+600