LevFin Insights: Middle Market Default: Miller Heiman misses interest payment on TLB due 2019; 4 BDCs hold the name

Miller Heiman (TwentyEighty Inc.) failed to make a Dec. 2 interest payment due on a first-lien term loan due 2019. The sales training and consulting company was acquired by Providence Equity Partners in 2013 and is held in four BDC portfolios.

The first-lien debt was quoted on Sept. 30 at 60-70 by Antares, and yesterday in a 40-50 range, according to sources.

Moody’s today downgraded the issuer rating to Ca from Caa3, and the first-lien debt to Ca from Caa2. The agency estimates a family loss-given default (LGD) rate of approximately 35%. S&P rates the borrower and debt CC.

Miller Heiman has been in discussions with lenders and Providence Equity for at least six months regarding ways to address its capital structure and weak liquidity. In June the company was out of compliance with a senior secured leverage test, according to S&P. Leverage is very high, estimated at over 10x (Moody’s adjusted) as of Sept. 30, 2016.

In August last year, Providence made an equity injection so Miller Heiman could repay revolver drawings, and lenders granted breathing room on covenants via an amendment.

Outstanding loans comprise a $40 million revolver due 2018, a $136 million, first-lien term loan due 2019 and a $223 million, first-lien term loan due 2019. GE Capital and BMO Capital Markets arranged the original 2013 buyout loans for Providence Equity, and GE Capital subsequently arranged an add-on term loan in 2014.

The company generated $257 million in revenue for the twelve months ended Sept. 30. – Kelly Thompson

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