Payless upsizes term loan to $305 million, tightens spread, discount talk

By Paul A. Harris

Portland, Ore., Sept. 18 - Payless ShoeSource/Collective Licensing International upsized its $275 million term loan (B1/B) to $305 million from $275 million on Tuesday.

Spread talk tightened to Libor plus 600 basis points with a 1.25% Libor floor. Earlier talk was 600 to 625 bps.

Discount talk tightened to 98.50 from 98 to 99.

The loan has 101 soft call protection for one year, the source said. It is expected to price and allocate on Wednesday.

Morgan Stanley Senior Funding Inc., Jefferies & Co. and KKR Capital Markets are leading the deal.

In addition, the company is getting a $250 million senior secured asset-based revolving credit facility from Wells Fargo Capital Finance.

Proceeds will be used to help fund the buyout of the company by Blum Capital Partners and Golden Gate Capital from Collective Brands Inc.

Closing is expected late in the third quarter or early in the fourth quarter. The deal is subject to customary conditions, including Collective Brands' shareholder approval and regulatory approval, which have both been received.

Payless, a specialty family footwear retailer, will continue to have headquarters in Topeka, Kan., and Collective Licensing, a development and licensing company, will remain based in Englewood, Colo.

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