American Seafoods Group announced it has tapped finance company Ares Capital for a $800 million first and second-lien credit facility that backs a recapitalization of the Seattle-based fish harvesting company, in a deal that is notable for both its size and syndication strategy focused on alternative lenders.

Ares Capital, which lends to private middle market companies, is holding a large anchor position in the deal and syndicated the rest to a group of nearly 20 lenders, comprised predominantly of non-bank lenders such as Business Development Companies, as well as a handful of Nordic banks.

The deal illustrates the increasing opportunities for a growing class of alternative debt capital providers to serve borrowers and private equity sponsors where banks are increasingly constrained by regulatory guidelines, and underscores the willingness of those lenders to step in on a sizeable transaction.

“We did consider a couple of paths including a more traditional agent-led syndication, but given the complexity of the transaction and the story, the certainty of execution offered by Ares was important,” said Scott Perekslis, co-founder and managing partner at Bregal Partners, the private equity sponsor backing American Seafoods’ recapitalization.

The transaction refinances and reduces the company’s outstanding debt, in part by the Ares-led financing as well as by a material equity infusion by Bregal and other co-investors. Following the recapitalization, Bregal holds a significant but non-controlling ownership stake in the company.
“The company refinanced all its debt at various levels resulting in a very clean, simple capital structure and meaningfully reduced total leverage,” Perekslis said.

Moody’s said initial leverage following the recap was 6.8 times debt-to-Ebitda. “Although ASG’s leverage is high, some of the risk is mitigated by the value of the company’s fleet, its fishing rights, and the currently favorable regulatory environment,” it said in a ratings note.

Moody’s assigned the company a B3 corporate family rating, a B2 rating to the first-lien debt and a Caa2 rating to the second-lien term loan.
American Seafoods is the largest harvester of wild caught fish for human consumption in the US, boasting a leading market share in pollack.

The capital structure now comprises a $60 million, six-year revolver, a $540 million, six-year first-lien term loan and a $200 million 6.5-year second-lien term loan. The spread on the first-lien term loan is 500bp over Libor, while second-lien pricing is 900bp over Libor.