1-800 Contacts updates first-, second-lien term loan sizes, pricing

By Sara Rosenberg

New York, Oct. 16 – 1-800 Contacts Inc. (CNT Holdings I Corp.) upsized its seven-year covenant-lite first-lien term loan B to $980 million from $930 million and downsized its eight-year covenant-lite second-lien term loan to $315 million from $340 million, according to a market source.

Also, pricing on the first-lien term loan was set at Libor plus 375 basis points, the low end of the Libor plus 375 bps to 400 bps talk, a 25 bps step-down was added at five times net first-lien leverage and the original issue discount firmed at 99.5, the tight end of the 99 to 99.5 talk, the source said.

Pricing on the second-lien term loan was reduced to Libor plus 675 bps from talk in the range of Libor plus 750 bps to 775 bps and the discount was revised to 99.5 from 99.

Both term loans still have a 0.75% Libor floor, the first-lien term loan still has 101 soft call protection for six months and amortization of 1% per annum, and the second-lien term loan still has hard call protection of 102 in year one and 101 in year two.

The company’s now $1.405 billion of senior secured credit facilities, up from $1.38 billion, also provide for a $110 million five-year revolver.

Morgan Stanley Senior Funding, Inc., KKR Capital Markets, Jefferies LLC, UBS Investment Bank, Barclays, Credit Suisse Securities (USA) LLC, Societe Generale, Mizuho and MUFG are the joint lead arrangers and bookrunners on the deal, with Morgan Stanley the left lead on the first-lien loan and KKR the left lead on the second-lien loan.

Recommitments were scheduled to be due at 2 p.m. ET on Friday, the source added.

Proceeds will be used to help fund the buyout of the company by KKR from AEA Investors.

The funds from the $25 million of additional proceeds raised will be used to provide cash to the balance sheet and reduce the equity check by $15 million.

1-800 Contacts is a Draper, Utah-based seller of contact lenses.

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