Wellfleet Credit Partners closes $360m debut CLO

The US firm launched its new credit business with former Bear Stearns leveraged finance veterans earlier this year.  

Wellfleet Credit Partners has raised a $360 million collateralized loan obligation (CLO), Wellfleet CLO 2015-1. The vehicle is the first CLO for Wellfleet, the performing credit unit of Littlejohn & Co., a Connecticut-based private equity firm.

The CLO will be backed by a diverse portfolio of broadly syndicated senior secured loans. Eight classes of notes rated Aaa through B3 by Moody’s and three classes of notes rated AAA by Fitch totaling $331 million were placed. Littlejohn funds, as well as its partners, are investors in the CLO. 

The CLO vehicle will have a two-year non-call period and a four-year reinvestment period with an overall lifetime of 12 years.

“Despite a volatile market environment, we are delighted by the strong reception that the CLO received from prominent CLO investors,” Brian Ramsay, president of Littlejohn, said in a statement. 

Most of the issuance ($215 million) is in Class A-1 triple-A rated notes priced at three-month Libor plus 165bps. The rest of the capital structure comprises:

$2 million in Class X notes rated Aaa priced at 100bps over three-month Libor;

$43 million in Class B notes rated Aa2 priced at three-month Libor plus 250bps;

$9 million of A-2 notes rated Aaa priced at 3.29 percent;

$20 million in Class C notes rated A2 priced at 5.41 percent;

$19.25 million Class D notes rated Baa3 priced at 450bps over;

$15.75 million Class E notes rated Ba3 priced at Libor plus 635bps;

$7 million Class F notes rated B3 priced at 735bps over.

Morgan Stanley acted as the arranger for the CLO. Dechert was the legal advisor.

Littlejohn Debt Management formed Wellfleet as a dedicated performing credit group to invest in broadly syndicated loans and related fixed-income investments earlier this year. The Wellfleet team is led by Scott McKay and Dennis Talley. The duo are both former Bear Stearns leveraged finance professionals. More recently, they worked at Doral Leveraged Asset Management, where they helped the firm raise three US CLOs. Doral’s CLOs were acquired by Dallas, Texas-based Triumph Capital Advisors in March.

“Dennis and Scott have been a great addition to our debt platform as Littlejohn is already seeing the benefits of extending its reach into performing credit,” Richard Maybaum, a Littlejohn partner, said in a statement.

Littlejohn & Co. is a Greenwich, Connecticut- based private equity firm that invests in mid-market companies that are undergoing a fundamental change in capital structure, strategy, operations or growth. The firm is currently investing from Littlejohn Fund V, which has $2 billion in capital commitments.