Ascena ups spread on $1.8 billion term loan B to Libor plus 450 bps

By Sara Rosenberg

New York, July 29 – Ascena Retail Group Inc. increased pricing on its $1.8 billion seven-year covenant-light senior secured term loan B (Ba2/BB+) to Libor plus 450 basis points from talk of Libor plus 350 bps to 375 bps, according to a market source.

In addition, the original issue discount on the term loan was changed to 98 from 99.5 and the 101 soft call protection was extended to one year from six months, the source said.

Furthermore, amortization on the term loan was sweetened to 1% in year one and 5% per annum thereafter, from 1% per annum, the incremental allowance was trimmed to $350 million from $700 million and the 12-month MFN sunset provision was eliminated.

The term loan still has a 0.75% Libor floor.

Recommitments were due at 1 p.m. ET on Wednesday, the source added.

Goldman Sachs Bank USA and Guggenheim Securities LLC are the joint lead arrangers and bookrunners on the term loan B.

Along with the term loan, the company is getting a $600 million five-year ABL revolver with pricing of Libor plus 125 bps to 150 bps based on excess availability and a 20 bps to 25 bps unused fee.

Proceeds from the term loan and ABL revolver borrowings will be used to help fund the acquisition of ANN Inc. and refinance existing debt.

Under the agreement, ANN is being purchased for $37.34 in cash and 0.68 of a share of Ascena common stock in exchange for each share of ANN common stock. The transaction gives ANN an enterprise value of about $2 billion.

Closing is expected during the week of Aug. 17, subject to customary conditions, including the expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and ANN shareholder approval.

At closing, ANN stockholders will own about 16% of Ascena.

Other funds for the transaction will come from balance sheet cash.

Ascena is a Mahwah, N.J.-based specialty retailer offering clothing, shoes and accessories for misses and plus-size women. ANN is a New York-based women’s specialty retail fashion company.

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