Blue Buffalo launches $400 million term B at Libor plus 200-225 bps

By Sara Rosenberg

New York, May 10 – Blue Buffalo Pet Products Inc. launched at its bank meeting on Wednesday a $400 million seven-year senior secured term loan B that is talked at Libor plus 200 basis points to 225 bps with a 0% Libor floor and an original issue discount of 99.5, according to a market source.

The term loan B includes a 25 bps pricing step-down when first-lien gross leverage is less than or equal to 1 time or the company achieves investment-grade corporate and facility ratings, the source said.

Also, the term loan B has 101 soft call protection for six months, amortization of 1% per annum, and a maximum consolidated first-lien net leverage ratio covenant of 4 times.

The accordion on the loan is the sum of the greater of $285 million and 100% of LTM consolidated EBITDA plus an unlimited amount subject to first-lien gross leverage of no greater than 3.5 times, with 50 bps MFN subject to a 12-month sunset, the source continued.

The company’s $520 million senior secured credit facilities (BB+) also provide for a $120 million revolver that has the same first-lien net leverage ratio covenant as the term loan B.

Citigroup Global Markets Inc. and J.P. Morgan Securities LLC are the lead arrangers on the deal.

Commitments for the term loan B are due at 5 p.m. ET on May 18, the source added.

Proceeds will be used to refinance existing debt.

Closing is expected during the week of May 22.

Blue Buffalo is a Wilton, Conn.-based pet food company.

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