PetSmart has launched $1.9 billion of eight-year (non-call three) unsecured notes via Barclays (B&D), Citi, Deutsche Bank, Nomura, Jefferies, RBC, and Natixis. A roadshow runs from tomorrow through next Thursday, for pricing thereafter.
Proceeds from the 144A-for-life deal, along with those from a $4.3 billion term loan, back BC Partners’ acquisition of the company.
As reported, price talk on the loan is L+450-475, with a 1% LIBOR floor, offered at 99. Citigroup, Barclays, Deutsche Bank, Nomura, Jefferies, RBC Capital Markets and Macquarie are arranging the loan, which includes 12 months of 101 soft call protection and would yield 5.8-6.07% to maturity at current guidance. Commitments are due by 5:00 p.m. EST on Feb. 20.
The bonds will take out the syndicated high-yield bridge that cleared at original terms of L+700 and a 1% LIBOR floor, with 50 bps step-ups every three months. Note, the unsecured notes come with a 40% equity claw, and the first call is at par plus 75% coupon.
The debt financing also provides for a $750 million asset-based facility. The transaction includes an incremental facility of $800 million, plus the amount of voluntary prepayments of the TLB plus an unlimited amount up to net first-lien leverage at closing (including capital leases and borrowings under the ABL), subject to 50 bps MFN protection, sources noted.
Ratings are B+/B1 corporate and BB-/Ba3 on the term loan, with a 2 recovery rating, and B3/B- for the unsecured notes.
Leverage is being marketed at 4.5x net secured and 6.3x net total, sources said.
The buyout, which was announced in December, is valued at roughly $8.7 billion, which represents 9.1x Petsmart's adjusted EBITDA for the 12 months ended Nov. 2, according to the company. The sponsors, excluding Longview, will kick in up to $1.83 billion of equity.
The Phoenix-based retailer operates 1,387 pet stores in the U.S., Canada, and Puerto Rico. It trades on the NASDAQ under the ticker PETM, and has a market capitalization of roughly $8.2 billion.
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