PVH shifts funds between term loans, reduces B tranche pricing

By Sara Rosenberg

New York, Dec. 13 - PVH Corp. downsized its seven-year term loan B to $1.375 billion from $1.875 billion and upsized its five-year term loan A to $1.7 billion from $1.2 billion, according to a market source.

In addition, pricing on the term loan B was trimmed to Libor plus 250 basis points from talk of Libor plus 275 bps to 300 bps, the source said.

Furthermore, a ticking fee of 50 bps was added from March 15, 2013 through May 14, 2013 and 100 bps thereafter, the source remarked.

The term loan B still has a 0.75% Libor floor and an original issue discount of 991/2.

Included in the B loan is 101 soft call protection for one year.

Pricing on the company's term loan A, as well as on a $750 million five-year revolver, was left unchanged at Libor plus 200 bps. The spread is based on a leverage grid with pricing ranging from Libor plus 150 bps to 225 bps, the source said.

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.

Recommitments are due at noon ET on Friday, the source added.

Barclays Capital Inc., 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 $3.825 billion senior secured credit facility (Ba1/BBB-).

Proceeds will be used to help fund the cash portion of the acquisition of Warnaco Group Inc., to 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.

Other funds for the deal will come from $700 million of notes.

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

Net senior secured leverage is 2 times, net total leverage is 3.1 times and lease-adjusted leverage is 4 times.

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

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