OHA is Administrative Agent & Lead Left Arranger for Private Refinancing of National Carwash Solutions

Rhea-AI Summary

On June 11, 2024, Oak Hill Advisors (OHA) announced its role as the Administrative Agent and Lead Left Arranger in a unitranche facility assisting National Carwash Solutions (NCS), a Berkshire Partners portfolio company, in refinancing over one billion dollars of existing debt. The financing package includes a term loan, delayed draw term loan, and revolver, with OHA contributing half the amount. OHA's involvement, rooted in its extensive industry experience since 2019 and prior investment in NCS in 2021, underscores its confidence in NCS's market position and growth potential. The strategic refinancing aims to bolster NCS's financial health and support its continued growth trajectory.

Positive

• OHA's role as Administrative Agent and Lead Left Arranger signifies a high level of confidence and leadership in the refinancing process.
• The over one billion dollar financing facility indicates substantial financial backing for NCS, ensuring liquidity and operational support.
• OHA's contribution of half the financing amount showcases strong involvement and commitment towards NCS.
• The refinancing primarily aims to address existing debt, potentially improving NCS's financial stability and reducing interest obligations.
• OHA's previous investments in NCS and other carwash-related assets since 2019 highlight deep industry expertise and strategic positioning.
• The partnership with Berkshire Partners strengthens the financial and operational support for NCS, facilitating its growth and market position.

Negative

• The reliance on significant refinancing could indicate underlying financial vulnerabilities in NCS's existing debt structure.
• Potential risks associated with a unitranche financing structure, including higher interest rates compared to traditional loans, may impact NCS's future financial performance.
• The scale of the financing package might lead to increased debt burden and financial obligations for NCS, potentially affecting its profitability.

Insights

Financial Analyst

The unitranche facility that OHA provided to National Carwash Solutions (NCS) is a significant financial development. A unitranche loan is a type of financing that combines senior and subordinated debt into one facility, often simplifying the capital structure and offering greater flexibility. The total facility exceeds one billion dollars, indicating robust confidence from OHA and other lenders in NCS's financial health and market position.

This refinancing will primarily be used to manage existing debt. Such moves can reduce interest expenses, extend debt maturities and improve liquidity. For an investor, this can signal a company’s focus on strengthening its balance sheet, which is generally a positive sign, especially in a capital-intensive industry like car wash services.

Furthermore, OHA’s expanded relationship with NCS suggests a high level of trust and positive past experiences, hinting at strong credit quality and potential for future growth. This confidence is crucial, especially given the competitive nature of the car wash industry and the need for ongoing investment in technology and infrastructure.

In the short term, refinancing existing debt can alleviate financial pressure, while in the long term, it can support growth initiatives or potential acquisitions. For investors, this is a positive development, indicating the company is proactively managing its financial structure.

Rating: 1

Market Research Analyst

National Carwash Solutions (NCS) operates in a niche yet growing market. The car wash industry has seen increased demand due to rising car ownership and a growing trend towards premium vehicle care services. NCS’s role as a leading provider in this space implies it has a significant market share and competitive advantage in terms of products and services.

The refinancing provided by OHA, particularly under a unitranche structure, indicates not just financial restructuring but also a strategic move to leverage market opportunities. This type of financing is often used by companies with stable cash flows and strong growth prospects, signaling to investors that NCS is well-positioned to capitalize on future market trends.

For retail investors, it’s important to note the growth potential within the car wash sector. Innovations in car wash technology, eco-friendly products and subscription-based models are driving industry evolution. NCS, backed by a strong financial partner like OHA, seems poised to benefit from these trends.

Rating: 1

New York, New York, June 11, 2024 (GLOBE NEWSWIRE) -- Oak Hill Advisors (“OHA”) served as Administrative Agent and Lead Left Arranger for a unitranche facility supporting National Carwash Solutions (“NCS”), a portfolio company of Berkshire Partners (“Berkshire”). NCS is a leading provider of car wash equipment, supplies and services to operators across North America. OHA provided half of the over one billion dollar total financing facility, consisting of a unitranche term loan, delayed draw term loan and revolver, which is being used primarily to refinance the company’s existing debt.

OHA’s extensive knowledge of the carwash ecosystem, having invested in multiple credits in both public and private markets since 2019, positioned it to have a key role in this refinancing solution. OHA first invested in NCS in 2021, supporting Berkshire’s buyout of the company. With this transaction, OHA significantly expanded its lending relationship with NCS, reflecting OHA’s conviction in its market-leading positioning and underlying credit quality.  

“With a resilient business model and strong sponsor support, NCS is a leading player poised for continued growth within a sector that we know well,” said Eric Muller, Portfolio Manager and Partner at OHA. “We look forward to continuing both our longtime support of the company and partnership with Berkshire through this scaled financing solution.”

###

About OHA: Oak Hill Advisors (OHA) is a leading global credit-focused alternative asset manager with over 30 years of investment experience. OHA works with institutions and individuals and seeks to deliver a consistent track record of attractive risk-adjusted returns. The firm manages approximately $64 billion of capital across credit strategies, including private credit, high yield bonds, leveraged loans, stressed and distressed debt and collateralized loan obligations as of March 31, 2024. OHA’s emphasis on long-term partnerships with companies, sponsors and other partners provides access to a proprietary opportunity set, allowing for customized credit solutions across market cycles.

With over 400 experienced professionals across six global offices, OHA brings a collaborative approach to offering investors a single platform to meet their diverse credit needs. OHA is the private markets platform of T. Rowe Price Group, Inc. (NASDAQ – GS: TROW). For more information, please visit oakhilladvisors.com.

About NCS: Founded in 1973 and headquartered in Grimes, IA, NCS is the carwash industry’s Proven Partner for operational excellence and sustainable growth. As part of its mission to make life better through carwashing, NCS delivers cutting-edge solutions that improve efficiency, promote environmental sustainability and enhance customer satisfaction. The company’s robust family of brands includes well-known names such as MacNeil, Ryko, Vacutech, PurClean, TSS, Armor All Professional®, Rain-X®, Blue Coral® and Black Magic®. NCS has also established the only direct end-to-end customer service and support network in the industry, and offers an advanced app-based carwash management system, NCS Lens, as part of its Carwash 4.0™ Connected Carwash vision for the future. For more information about National Carwash Solutions, visit http://www.ncswash.com.

About Berkshire Partners: Berkshire Partners is a 100% employee-owned, multi-sector specialist investor in private and public equity. The firm’s private equity team invests in well-positioned, growing companies across services & industrials, technology & communications, consumer, and healthcare. Since inception, Berkshire Partners has made more than 150 private equity investments and has a strong history of collaborating with management teams to grow the companies in which it invests. The firm's public equity group, Stockbridge, founded in 2007, manages a concentrated portfolio seeking attractive long-term investments. The firm’s Stockbridge and Private Equity teams frequently collaborate and leverage their collective industry expertise across sectors. For additional information, visit www.berkshirepartners.com.

FAQ

What role did OHA play in the refinancing of National Carwash Solutions?

OHA served as the Administrative Agent and Lead Left Arranger for a unitranche facility supporting National Carwash Solutions.

How much was the financing facility for National Carwash Solutions?

The total financing facility was over one billion dollars.

What types of loans were included in the refinancing package for NCS?

The financing package included a unitranche term loan, delayed draw term loan, and revolver.

Why did OHA decide to support the refinancing of National Carwash Solutions?

OHA supported the refinancing due to its confidence in NCS's market-leading position, resilient business model, and the strong backing from Berkshire Partners.

When did OHA first invest in National Carwash Solutions?

OHA first invested in NCS in 2021.

How does OHA's involvement affect its relationship with NCS and Berkshire Partners?

OHA's involvement expands its lending relationship with NCS and reinforces its partnership with Berkshire Partners.