FTD details tranching on $450 million credit facility for purchase by United Online

By Sara Rosenberg

New York, May 6 - FTD Group Inc. came out with structural details on the $450 million credit facility that it plans to use to help fund its acquisition by United Online Inc., according to an 8-K filed with the Securities and Exchange Commission Tuesday.

Wells Fargo is the lead arranger, bookrunner and administrative agent on the deal that is expected to be marketed in the third quarter.

Tranching on the deal is comprised of a $75 million five-year revolver, which is expected to be undrawn at close, a $175 million five-year term loan A and a $200 million six-year term loan B.

Previously, it was known that the deal would include a $75 million revolver and $375 million of term loan debt, but the breakdown of the term loan debt was unavailable.

Financial covenants include a leverage ratio, a fixed-charge coverage ratio and a maximum capital expenditures requirement.

Under the acquisition agreement, FTD stockholders will receive $7.34 in cash, 0.4087 of a share of United Online common stock and $3.31 principal amount of United Online 13% senior secured notes due 2013 per share.

The total consideration to FTD stockholders will be about $456 million, consisting of $222 million in cash, 12.35 million shares of United Online stock and $100 million aggregate principal amount of motes.

The remaining purchase price consists of repayment of FTD debt and expenses incurred in connection with the transaction.

If United Online raises an additional $100 million in debt financing, it may replace the senior notes with additional cash consideration, in which case FTD stockholders will receive a total of $10.15 in cash and 0.4087 of a share of United Online stock per share.

In such case, the total consideration to FTD stockholders will be about $440 million, consisting of $307 million in cash and 12.34 million shares of United Online stock.

The $100 million in additional debt financing could come in the form of senior secured debt, mezzanine financing, as well as in various other forms.

Pro forma leverage is 1.9 times, based on total debt to pro forma combined reported United Online adjusted OIBDA and FTD adjusted EBITDA for the 12 months ended Dec. 31.

Upon closing of the transaction, the former FTD stockholders will own about 15% of United Online.

The acquisition is anticipated to be completed during the third quarter, subject to approval of FTD stockholders, a financing condition and customary closing conditions.

After the closing of the transaction, FTD will continue to operate as a wholly owned subsidiary of United Online from FTD's existing facilities, including its U.S. headquarters in Downers Grove, Ill., and its international headquarters in the United Kingdom.

In connection with the acquisition, FTD's 7¾% senior subordinated notes will either be defeased at closing or retired pursuant to a tender offer and consent solicitation.

FTD is a provider of floral related products and services. United Online is a Woodland Hills, Calif., provider of consumer internet and media services.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.