Actionable Ideas for Companies and Sponsors

The Return of Portable Capital Structures

Since mid-March, we have seen the return of portable capital structures in the context of refinancings. This is in contrast to the previous four months where this alternative was not available to issuers, as investors were requiring indebtedness to be refinanced in the event of a change-of-control. Portability provides issuers with significant flexibility in the context of executing sale transactions especially in volatile capital markets. Recently Mirion Technologies, owned by Charlesbank Capital Partners, achieved portability for 18 months post-closing, subject to leverage no higher than closing levels. In addition, TruGreen, owned by Clayton, Dubiler & Rice, completed a refinancing with portability for 24 months post-closing. TruGreen’s portability also allows pro forma leverage to be increased to 6.25x ebitda in a buyout versus the 6.1x closing leverage for the refinancing.