HD Supply Holdings said Monday it has commitments from investors to fund a new tranche of term loans in an aggregate principal amount of $550 million priced at 99.50% of the principal amount and bearing interest at a rate of LIBOR plus 2.75% per annum.
The rate will be reduced to a rate of LIBOR plus 2.50% per annum upon the company reaching a total consolidated leverage ratio of 3.0x or less.
HD Supply said it plans to use the proceeds of such new tranche of term loans, together with cash on hand and borrowings under its existing ABL Credit Facility, to redeem its outstanding $1.27 billion aggregate principal amount of 7.50% senior notes due 2020 and to pay related fees and expenses.
The company has also reached a deal to amend its senior secured term loan facility to eliminate its LIBOR floor by means of a replacement tranche bearing interest at a rate of LIBOR plus 2.75% per annum that will replace the remaining principal outstanding from the existing tranche of term loans.
The company expects the total cost of this transaction, including call premium on the 7.50% senior notes to be redeemed and discount on the new term loan, will be approximately $55 million. Total annual interest savings is expected to be approximately $65 million.
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