Michaels $3.4 billion credit facility launch targeted for Oct. 11

By Sara Rosenberg

New York, Sept. 25 - Michaels Stores Inc. is tentatively scheduled to hold a bank meeting on Oct. 11 to launch its proposed $3.4 billion senior secured credit facility, according to a market source.

Deutsche Bank, JPMorgan, Bank of America and Credit Suisse are the lead banks on the deal.

The credit facility consists of an up to $1 billion asset-based revolver and a $2.4 billion term loan.

The revolver will be subject to a borrowing base that will be calculated periodically based on specified percentages of the value of eligible credit card receivables and eligible inventory. A maximum of $250 million may be borrowed under the revolver for LBO financing.

Proceeds from the credit facility, along with $1.4 billion in proposed high-yield bonds, will be used to help back fund the leveraged buyout of Michaels by Bain Capital and The Blackstone Group.

As a backup for the bonds, the company has received commitments for an up to $700 million senior unsecured bridge loan and an up to $700 million senior subordinated unsecured bridge loan.

Under the LBO agreement, Michaels Stores' shareholders will receive $44.00 per share in cash, representing a transaction value of more than $6 billion.

Bain and Blackstone have each committed to provide $1.092 billion in equity to help fund the transaction, for a total equity contribution of $2.184 billion.

Michaels Stores is an Irving, Texas, specialty retailer of arts, crafts, framing, floral, wall decor and seasonal merchandise for the hobbyist and do-it-yourself home decorator.

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