PVH releases price talk on $3.8 billion credit facility with launch

By Sara Rosenberg

New York, Nov. 28 - PVH Corp. came out with price talk on its $3,825,000,000 senior secured credit facility (Ba1/BBB-) with its Wednesday bank meeting, according to a market source.

The $750 million five-year revolver and $1.2 billion five-year term loan A are both talked at Libor plus 200 basis points, the source said. The spread is based on a leverage grid with pricing ranging from Libor plus 150 bps to 225 bps.

Upfront fees on the pro rata debt are 50 bps for commitments of $100 million, 40 bps for commitments of $75 million, 30 bps for commitments of $50 million and 20 bps for commitments of less than $50 million.

Amortization on the term loan A is 5% in years one and two, 7.5% in year three and 10% in year four.

As for the $1,875,000,000 seven-year term loan B, it is talked at Libor plus 275 bps to 300 bps with a 0.75% Libor floor and an original issue discount of 991/2, the source said.

Commitments are due at 5 p.m. ET on Dec. 12.

Barclays, Bank of America Merrill Lynch, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC and RBC Capital Markets LLC are the joint lead arrangers and bookrunners on the deal.

Proceeds will be used to help fund the cash portion of the acquisition of Warnaco Group Inc., too refinance debt at both companies and to provide liquidity going forward.

Under the agreement, Warnaco stockholders will receive $51.75 per share in cash and 0.1822 of a share of PVH common stock for each share of Warnaco common stock.

The transaction is valued at about $68.43 per share and the total enterprise value is around $2.9 billion, representing 9 times 2012 EBITDA and 7.6 times 2012 EBITDA, including synergies.

Upon announcing the acquisition, the company said that it received a commitment for $4,325,000,000 of new debt, comprised of a credit facility and a bridge loan that would be taken out by senior notes.

Closing is expected in early 2013, subject to customary conditions, including Warnaco stockholder approval and regulatory approvals.

Net senior secured leverage is 2.1 times, net total leverage is 3 times and lease-adjusted leverage is 3.9 times, the source said.

PVH is a Bridgewater, N.J.-based apparel company. Warnaco is a New York-based apparel company.

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