Men's Wearhouse finalizes $1.1 billion term loan at Libor plus 350 bps

By Sara Rosenberg

New York, April 14 - Men's Wearhouse Inc. firmed pricing on its $1.1 billion seven-year covenant-light term loan B (Ba2/B+) at Libor plus 350 basis points, the low end of the Libor plus 350 bps to 375 bps talk, according to a market source.

As before, the term loan has a 1% Libor floor, an original issue discount of 99 and 101 soft call protection for six months.

The company's $1.6 billion senior secured credit facility also includes a $500 million five-year asset-based revolver.

J.P. Morgan Securities LLC and Bank of America Merrill Lynch are the lead banks on the financing.

Proceeds will be used to help fund the acquisition of JoS. A Bank Clothiers Inc. for $65.00 per share in cash, or total consideration of $1.8 billion.

Other funds for the transaction are expected to come from $600 million of senior notes.

Backing the notes is a commitment for a $600 million senior unsecured bridge loan that is priced at Libor plus 675 bps, increasing by 50 bps every three months until a specified cap is reached. There is a 1% Libor floor.

The combined company will have sales of $3.5 billion on a pro forma basis, and the strong free cash flow generated by the combined company is expected to enable rapid deleveraging.

Closing is expected by the third quarter, subject to the satisfaction of customary conditions, including expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and the tender of a majority of JoS. A Bank shares.

Men's Wearhouse is a Houston-based specialty retailer of men's apparel. JoS. A. Bank is a Hampstead, Md.-based designer, manufacturer and retailer of men's apparel, footwear and accessories.

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