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Osaic, the private equity-backed independent broker/dealer that recently completed a multi-year consolidation of several acquired b/ds, has proposed to refinance some of its debt, according to a Moody’s Ratings report. That includes a plan to reprice its senior secured bank credit facility, increase its 6.75% senior secured notes due 2032 by $500 million, and add $250 million to its 8% senior unsecured notes due 2033.
Moody’s said its ratings would remain unchanged following the proposed refinancing transactions, and it maintains its stable outlook for the company. The firm plans to use the $500 million to repay senior secured notes due in 2028, and the $250 million add-on will refinance notes rolled over from the Ladenburg Thalmann acquisition, completed in 2020.
“We regularly evaluate opportunities to optimize our capital structure and manage our maturities,” an Osaic spokesperson said.
The firm declined to comment on the Moody’s report.
“We view the transactions as credit positive as it extends the company’s debt maturity profile, simplifies its capital structure, and is expected to reduce its weighted average cost of debt,” Moody’s said in the report.
The ratings agency doesn’t expect the refinancing transactions to materially increase Osaic’s debt leverage, despite its acquisition activity. The stable outlook also reflected the company’s move into the fee-only wealth management space, “which, given its more favorable economics, is expected to support EBITDA growth.”
CEO Jamie Price has been focused on building out affiliation models across the RIA space, including an employee channel. The June acquisition of $13.5 billion fee-only CW Advisors established a significant beachhead for those efforts.
In July, the company raised additional debt to help fund the acquisition, as well as other deals, including a new $3 billion senior secured first lien term loan and a $990 million senior secured first lien revolving credit facility.
“This acquisition has the potential to bolster Osaic’s market position by utilizing CW Advisors’ internal M&A machine to increase its presence within the fee-only RIA and employee channels,” Moody’s said at the time.
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