RBC Capital Markets and UBS have finalized pricing on the LBO financing for Bob’s Discount Furniture after increasing the spread on the first-lien term loan and cutting the offer price on the second-lien, according to sources.
The spread for the $180 million, seven-year first-lien term loan was increased to L+425, from original talk of L+400, while the 1% LIBOR floor and 99 offer price remain unchanged, according to sources. At the revised level, the yield-to-maturity increases to 5.54%, from 5.28%. The loan includes 101 soft call protection for 6 months.
Pricing for the $80 million, eight-year second-lien term loan is unchanged, at L+800, with a 1% LIBOR floor, but the OID was cut to 98, from 99. With that, the yield-to-maturity is 9.7%, versus 9.5% as initially outlined. The second-lien will be callable at 102 and 101 in years one and two.
The financing will also include a $40 million asset-based revolver.
Corporate ratings are B/B3. The first-lien is rated B/B2, with a 3 recovery rating. The second-lien is rated CCC+/Caa1, with a 6 recovery rating.
The financing supports the buyout of Bob’s by Bain Capital, which was announced in December. Bain is taking a majority stake in the retailer from Apax Partners, KarpReilly and other shareholders. Company management will continue to own a significant stake.
Bob’s Discount Furniture, based in Manchester, Conn., operates as a furniture retailer, with 47 stores located throughout the Northeast and Mid-Atlantic regions. – Jon Hemingway