Dollar Tree alters tranche sizes, flexes term B to Libor plus 350 bps

By Sara Rosenberg

New York, Feb. 5 – Dollar Tree Inc. downsized its seven-year term loan B to $3.95 billion from $5.2 billion and upsized its five-year term loan A to $1 billion from $500 million, according to a market source.

Also, pricing on the term loan B was reduced to Libor plus 350 basis points from talk at launch of Libor plus 375 bps to 400 bps. The original issue discount was tightened to 99˝ from 99, the source said.

Furthermore, the 101 soft call protection on the term loan B was extended to one year from six months.

The term loan B still has a 0.75% Libor floor.

The company’s now $6.2 billion credit facility, down from $6.95 billion, also includes a $1.25 billion five-year revolver.

Pricing on the term loan A and the revolver is Libor plus 225 bps.

Recommitments were due at 3 p.m. ET on Thursday, the source added.

J.P. Morgan Securities LLC, Wells Fargo Securities LLC, Bank of America Merrill Lynch, RBC Capital Markets LLC and U.S. Bank NA are the leads on the deal.

Proceeds will be used to help fund the acquisition of Family Dollar Stores Inc. in a cash and stock deal valued at $8.5 billion.

Under the agreement, Family Dollar shareholders will receive $74.50 per share, comprised of $59.60 in cash and $14.90 in Dollar Tree stock, subject to a collar.

Other funds for the transaction will come from $3.25 billion of notes, upsized from $2.5 billion with the term loan B downsizing.

The financing is expected to be completed this month.

Family Dollar stockholders already approved the transaction but the acquisition remains subject to approval by the Federal Trade Commission.

Closing of the Family Dollar acquisition could occur as soon as March.

Dollar Tree is a Chesapeake, Va.-based discount store operator. Family Dollar is a Matthews, N.C.-based chain of discount stores.

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