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Beats Electronics trims term B to $350-$400 million, ups pricing
By Sara Rosenberg
New York, June 18 - Beats Electronics LLC reduced the size of its term loan B to somewhere in the range of $350 million to $400 million from $500 million and raised pricing to Libor plus 475 basis points from talk of Libor plus 325 bps to 350 bps, according to a market source.
Also, the Libor floor was increased to 1.25% from 1% and the original issue discount widened to 98 from 991/2, the source said.
Furthermore, the soft call protection was changed to 102 in year one and 101 in year two from just 101 for one year, and the maturity was shortened to 5½ years from six years, the source said.
And, a gross leverage covenant with step-downs was added to the previously covenant-light term loan.
Amortization on the term loan is 5% in years one, two and three and 10% each year after that.
With the term loan downsizing, the company upsized its five-year revolver to $250 million from $200 million, the source remarked.
The facility has an incremental allowance of up to 0.25 times inside of opening gross secured leverage, subject to 50 bps MFN.
Recommitments are due at noon ET on Friday.
Barclays, Citigroup Global Markets Inc. and J.P. Morgan Securities LLC are the bookrunners on the $600 million to $650 million deal (B2/B+).
Proceeds will be used to refinance a $225 million term loan and for general corporate purposes, with $400 million available for additional specified purposes, including acquisitions, investments and, for a limited period, distributions to shareholders.
The amount available for the dividend is limited to $150 million, the source added.
Beats Electronics is a Santa Monica, Calif.-based consumer audio company.
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