Happy Wednesday. Here’s what we’ve got today…

• A look at a possible first test of the “double dip” structure

• Plus, Sixth Street repurchases stake in the firm held by TPG

Testing the double dip:

The "double dip" credit structure has been in the spotlight this year after its use in a number of deals, but it still remains largely untested in a restructuring process. That may soon change with Wheel Pros, a Clearlake Capital-owned distributor of aftermarket auto wheels, which is preparing for a possible Chapter 11 filing as soon as this week.

Liquidity concerns emerged early last month after Wheel Pros management declined to take analyst questions during the company's latest earnings call. By the 26th, the company had missed an interest payment and entered into a forbearance agreement with lenders.

Per Reorg, the company's first lien lenders are likely to equitize their holdings and take majority ownership. A debtor-in-possession financing is also being arranged, though no plans have been finalized, and an out-of-court transaction may still be on the table.

The current process is made more interesting by the company's double dip transaction completed last year — Wheel Pros is now expected to be the first instance of a double dip financing in which the issuer failed to turn the business around and ultimately required a deeper restructuring.

A type of liability management exercise, a double dip allows lenders to work within existing covenants and baskets to provide a secured loan to a borrower, who then uses the proceeds to provide an intercompany loan to an affiliated entity. This additional step gives the initial secured loan lenders two claims against the same borrower: one direct claim from the first loan, and an additional indirect claim supported by the pledge from the intercompany loan.

This arrangement, along with other liability management deals more broadly, is meant to incentivize lender participation and increase the odds of obtaining additional financing for a distressed company that might otherwise struggle to find funding. By providing additional downside protection at the expense of non-participating lenders, an issuer is better able to convince lenders to provide new money.

In September, cash-strapped Wheel Pros negotiated a deal with lenders to provide additional liquidity as it tried to weather a prolonged period of weak post-pandemic consumer spending.

The agreement included a new $235 million first-in, last-out (FILO) facility open to all pre-transaction term loan lenders. Unlike a traditional FILO, which usually has a second lien or a third lien on term priority collateral, Wheel Pros' facility had a first lien on the term loan priority collateral and a second-out first lien on the ABL priority collateral.

As part of the deal, existing lenders provided new first lien and second lien term loans to two newly-formed Wheel Pros subsidiaries, who then lent the loan proceeds to their parent entity Wheel Pros Inc. in the form of a first lien intercompany term loan, after which the cash was used to make open-market purchases of the company’s original outstanding first lien term loan and unsecured notes.

The newly issued term loans received a secured guarantee pari to the existing loans, as well as an additional claim on the same collateral thanks to the double dip structure (as a result of the intercompany loan).

While the full cohort of pre-transaction term lenders participated in the deal, a small number of the unsecured noteholders remain outstanding. This group, along with any other unsecured creditors, is now pushed even further down the queue for repayment.

Kirkland & Ellis is acting as Wheel Pros' legal advisor, and Houlihan Lokey as its financial advisor. Akin Gump and PJT Partners are representing an ad hoc group of lenders.

• Energy Capital Partners has agreed to acquire Lightstone Generation, owner of one of the largest U.S. coal-fired power plants, from ArcLight Capital Partners and Blackstone for around $2.2 billion.

• A group led by Erik and Peter Nordstrom offered to acquire department store chain Nordstrom (NYSE: JWN) for $3.8 billion or $23 per share in cash.

• Aditude, a programmatic advertising platform backed by Volition Capital, acquired Hashtag Labs, a provider of UI and automation systems for publishers.

• Blackstone (NYSE: BX) agreed to acquire AirTrunk, an Australian data center operator, for A$24 billion from Macquarie Group and PSP Investments.

• Sixth Street exercised its option to repurchase the stake in the firm owned by TPG for around $1 billion at a valuation of around $10 billion, per Bloomberg.

• Bain Capital offered to acquire Fuji Soft, a Japanese software developer, for around $4.1 billion, besting last month’s tender offer from KKR by about 5 percent.

• REA Group is considering a takeover offer for Rightmove, the UK's largest property portal trading at a market value above £5 billion, per Bloomberg.

• Apax Partners invested in Altus Fire & Life Safety, a provider of regulation-mandated fire and life safety services in the Northeastern U.S.

• Clearlake Capital agreed to acquire pan-European private credit manager MV Credit from Natixis, adding $5.1 billion in new assets.

• 26North Partners agreed to acquire ArchKey Solutions, a provider of electrical and specialty systems, from One Rock Capital Partners for more than $1 billion.

• Partners Group led a $1.9 billion investment in EdgeCore Digital Infrastructure, a developer and operator of hyperscale data centers.

• Segro (LSE: SGRO) agreed to acquire Tritax EuroBox (LSE: EBOX), a European logistics real estate firm, for £1.1 billion.

• Veritiv, backed by Clayton, Dubilier & Rice, agreed to acquire Orora Packaging Solutions, Orora's (ASX: ORA) North American packaging and distribution business, for $1.8 billion.

• H.I.G. Capital acquired Action Elevator, a Millersville, Md.-based elevator services provider, from Align Capital Partners.

• GE Vernova (NYSE: GEV) acquired the remaining 55 percent stake in General Electric Saudi Advanced Turbines, a manufacturer of gas turbines and components for power plants, from Dussur.

• Lloyd's Register Group agreed to acquire Ocean Technologies Group, a provider of training and HR software for the maritime industry, from Oakley Capital.

• H.I.G. and CapVest have both joined the group of bidders vying for AAH, a UK-based pharmacy wholesaler backed by Aurelius Group.

• BYD Co. agreed to acquire Hedin Electric Mobility, a German distributor of BYD vehicles and parts.

• Cinven is in exclusive talks to acquire Finaxy, a French multi-specialist insurance broker, from Ardian.

• AirBaltic, Latvia's national airline, plans to raise up to €300 million in an initial public offering later this year.

• Turnspire Capital Partners acquired Pharmachem, a provider of nutrition ingredients and custom formulation services for the nutraceuticals industry, from Ashland (NYSE: ASH).

• Voyager Midstream, a portfolio company of Pearl Energy Investments, acquired various natural gas gathering and processing assets from Phillips 66 (NYSE: PSX).

• TA Associates acquired a majority stake in AlephYa Education, a pan-GCC education provider, from Ashmore Investment Saudi Arabia.

• Iron Creek Partners acquired MoneyThumb, a provider of automated document evaluation and fraud detection software for financial institutions.

• Metro Pacific Investments raised $500 million for its toll roads unit at a $5 billion valuation.

• Meridian Waste Acquisitions, backed by Warren Equity Partners, acquired Evergreen Environmental Partners Holdings and ADSI Holdings, waste management companies operating in Alabama and Mississippi, from BTG Pactual Strategic Capital.

• Banyan Software, backed by Norwest Venture Partners, acquired Automated Systems, a provider of community bank technology solutions.

• TPG Rise Climate acquired MIRATECH, a manufacturer of aftermarket emissions reduction technology for industrial engines.

• ACON Investments acquired a majority stake in Rymel, a Colombian manufacturer of electricity distribution transformers.

• Centerbridge agreed to acquire Banca Progetto, an Italian bank focused on SMEs, from Oaktree Capital Management.

• Charlesbank Capital Partners invested in Front Row Group, an e-commerce agency providing outsourced marketplace management to beauty, health & wellness, and CPG brands.

• Audax Strategic Capital invested in Amtivo, a provider of accredited certifications and assurance services, from Charterhouse Capital Partners.

• SFERRA Fine Linens, backed by Highlander Partners, acquired Antica Farmacista, a Seattle-based home fragrance brand.

• Prince Industries, a portfolio company of HC Private Investments, acquired Keystone Precision & Engineering, a Pepperell, MA-based manufacturer of components for defense and medical customers.

• PGW Auto Glass, a portfolio company of One Equity Partners, acquired PH Vitres d'Autos, a Canadian wholesale auto glass distributor and retail installer, from Driven Brands Holdings (Nasdaq: DRVN).

• Kohlberg & Co. acquired a majority stake in CleaResult, an Austin-based energy transition services provider, from TPG Growth and TPG Rise.

• Revelstoke Capital Partners invested in MediQuant, a provider of cloud-based data archiving and interoperability solutions for health systems.

• Mercer Advisors, backed by Oak Hill Capital, Genstar Capital, and Atlas Partners, acquired Benchmark Wealth Management, a Connecticut-based RIA.

Tech, Vertical SaaS, & Misc. Enterprise

• Sakana AI, a Tokyo-based startup developing nature-inspired AI models, raised $137 million in Series A funding led by NVIDIA, with participation from New Enterprise Associates, Khosla Ventures, and Lux Capital.

• You.com, an AI-powered search platform, raised $50 million in Series B funding led by Georgian, with participation from Salesforce Ventures, NVIDIA, SBVA, DuckDuckGo, and Day One Ventures.

• Revefi, a Seattle-based startup developing an AI-powered data operations platform, raised $20 million in Series A funding led by Icon Ventures, with participation from Mayfield, GTM Capital, and StepStone Group.

• Hypernative, a Web3 security solutions provider, raised $16 million in Series A funding led by Quantstamp, with participation from Bloccelerate VC, boldstart ventures, Borderless Capital, CMT Digital, IBI Tech Fund, Knollwood Investment Advisory, and Re7 Capital.

• Champion, an AI-powered customer advocacy platform, raised $3.3 million in seed funding led by Flyover Capital, with participation from High Alpha, Bread & Butter Ventures, and Stage 2 Capital.

Fintech

• Fido, a Ghanaian digital lender, raised $30 million in Series B funding co-led by BlueOrchard and FMO, including $20 million in equity and $10 million in debt from Stanbic Bank Ghana and Growth Investment Partners Ghana.

• Palm, a Swedish-Dutch enterprise cash management startup, raised $6.1 million in seed funding led by Speedinvest and Target Global, with participation from Upfin, Liquid2, and Greens.

Healthcare

• Arsenal Biosciences, a South San Francisco-based programmable cell therapy startup, raised $325 million in Series C funding led by Milky Way Investments Group, with participation from Arch Venture Partners, Regeneron Ventures, Nvidia, T. Rowe Price, Rock Springs Capital, Bristol Myers Squibb, Westlake Village BioPartners, and SoftBank.

• eGenesis, a developer of pig-based organ generation technology, raised $191 million in Series D funding led by Lux Capital, with participation from ARCH Ventures, Khosla Ventures, Farallon Capital Management, Alta Partners, Fresenius Medical Care Ventures, Bayer, DaVita, Eisai Innovation, NATCO Pharmaceuticals, and Parkwood Corporation.

Industrials, Greentech, & Other

• E Daddy, a UAE-based manufacturer of two-wheeler electric vehicles, raised $15 million in funding from Euroblast Middle East.

• Entalpic, a Paris-based startup developing catalysts to reduce CO2 emissions in chemical reactions, raised €8.5 million in seed funding from Breega, Cathay Innovation, and Felicis.

• Oxylus Energy, a developer of carbon utilization tech for methanol production, raised $4.5 million in seed funding co-led by Toyota Ventures and Azolla Ventures, with participation from Earth Foundry and Connecticut Innovations.

• Mizuho's Asset Management One is hoping to raise $3.4 billion for its first large-cap Japan fund, per Reuters.

• Bregal Sagemount raised around $800 million for a new opportunistic credit fund.

• PruVen Capital raised $378.5 million for its second early-stage fund.

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