FTD $450 million credit facility expected as June business

By Sara Rosenberg

New York, May 14 - FTD Group Inc. is anticipating holding a bank meeting next month to launch its proposed $450 million credit facility, with early June being the desired timeframe, according to a market source.

Wells Fargo is the lead arranger, bookrunner and administrative agent on the deal.

The facility consists 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.

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

Proceeds will be used to help fund United Online Inc.'s acquisition of FTD.

Under the transaction 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.

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

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