TRLPC: Asurion blocks 5,681 companies from buying its $2.73bn loan
By Kristen Haunss
NEW YORK Aug 11 (Reuters) - Technology insurance company Asurion has issued an extensive 59-page blacklist document that bars 5,681 entities from joining a $2.73 billion leveraged loan in a bid to stop its private information from potentially falling into the hands of rivals, sources said.
Companies from countries including Finland, Mexico, South Korea, England, Brazil and the U.S., with businesses ranging from sensor technology to appliance manufacturer, were disqualified by Asurion, along with brands such as Apple, Visa Inc and Amazon.com Inc.
Blacklists have been used since the 1990s in the private $840 billion U.S. leveraged loan market, which provides financing to non-investment grade companies, to restrict private information and keep out investors that have been difficult in past deals. Asurion's blacklist is among the most extensive and exhaustive to date, and their use is increasing. Eighty-eight percent of U.S. leveraged loan credit agreements included disqualified-lender language in July, an increase from 71.1 percent in June, according to Xtract Research.
Lengthy blacklists can allow borrowers "to keep out of their facility those entities they don't want to participate, either because they want to safeguard what they deem confidential information from competitors or they keep out other entities they think may cause mischief," Charles Tricomi, a covenant analyst at Xtract Research in Westport, Connecticut, said in an interview.
Nashville, Tennessee-based Asurion raised a $2.73 billion first-lien term loan and a $450 million add-on to its existing second-lien term loan in July, sources said. An Asurion spokesperson and a spokesperson for Bank of America Merrill Lynch, the lead arranger of the loan, did not return telephone calls seeking comment.
Asurion is indirectly owned by NewAsurion Corp, whose ownership includes Madison Dearborn Partners, Providence Equity Partners, Welsh, Carson, Anderson & Stowe, Berkshire Partners, the Canadian Pension Plan Investment Board and company management, according to a July 22 Moody's Investors Service report.
"There is sensitivity among borrowers about leakage of proprietary information to competitors, as well as concerns about the long-term strategic motivation of a non-traditional lender," Mats Carlston, co-chair of Winston & Strawn's finance practice in New York, said in an interview. "Vulture funds with a loan-to-own strategy are, of course, the classic disqualified lender."
Borrowers are also sensitive about private-equity firms that own rival companies accessing their information. Continuación...