Rent-A-Center $1.3225 billion credit facility to launch Tuesday

By Sara Rosenberg

New York, Sept. 27 - Rent-A-Center Inc. is scheduled to hold a bank meeting on Tuesday to launch its proposed $1.3225 billion credit facility, according to a market source.

JPMorgan is the lead bank on the deal.

The facility consists of a $400 million five-year revolver talked at Libor plus 175 basis points, a $197.5 million five-year term loan A talked at Libor plus 175 bps and a $725 million six-year term loan B talked at Libor plus 200 bps, the source said.

Proceeds will be used to refinance existing bank debt and fund the acquisition of Rent-Way, Inc. for $10.65 in cash per share. The transaction is valued at about $567 million, including the liquidation of all of Rent-Way's debt, such as its bonds and convertibles.

Pro forma for the transaction, Rent-A-Center's total net debt to leverage will be around 3.2 times, but that is expected to drop to around 2½ times within the first 12 to 18 months through the use of free cash flow.

Rent-A-Center is a Plano, Texas, rent-to-own operator. Rent-Way is an Erie, Pa., rental purchase company.

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