rue21 to get $680 million facility, $250 million notes for buyout

By Sara Rosenberg

New York, June 21 - rue21 inc. plans on getting a $680 million credit facility and issuing $250 million of senior unsecured notes to help fund its purchase by Apax Partners for $42 per share, or about $1.1 billion, according to an SC 13E3 filed with the Securities and Exchange Commission on Friday.

The credit facility consists of a $150 million five-year asset-based revolver and a $530 million senior secured covenant-light seven-year term loan.

Revolver pricing is expected at Libor plus 150 basis points with one 25 bps step-up and one 25 bps step-down based on average historical excess availability. The commitment fee can range from 25 bps to 37.5 bps based on the average daily unused portion.

Pricing on the term loan is expected at Libor plus 325 bps if first-lien secured leverage is more than 3.5 times, and Libor plus 300 bps if first-lien secured leverage is 3.5 times or less. However, if a ratings condition is not satisfied, pricing will be 25 bps higher than outlined.

The term loan is also anticipated to have a 1% Libor floor and amortization of 1% per annum.

Backing the notes is a commitment for a $250 million one-year senior unsecured increasing rate bridge loan that is priced at Libor plus 525 bps, or Libor plus 575 bps if a ratings condition is not satisfied, with a 1.25% Libor floor. The spread will increase by 50 bps every three months until it hits a cap.

J.P. Morgan Securities LLC and Bank of America Merrill Lynch are the co-lead arrangers, and bookrunners with Goldman Sachs Bank USA on the debt financing.

Other funds for the transaction will come from up to $283 million in equity.

Closing is expected by year-end, subject to shareholder approval and customary conditions.

rue21 is a Warrendale, Pa.-based retailer of girls and guys apparel and accessories.

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