Smart & Final to launch $400 million of term loans on Thursday

By Sara Rosenberg

New York, May 10 - Smart & Final Inc. is scheduled to hold a bank meeting on Thursday afternoon to launch $400 million of first- and second-lien term loans, according to a market source.

Credit Suisse Securities (USA) LLC and Deutsche Bank Securities Inc. are the joint lead arrangers and bookrunners on the deal, and Morgan Joseph is a co-manager.

The debt consists of a $325 million covenant-light seven-year first-lien term loan and a $75 million covenant-light 71/2-year second-lien term loan, the source said.

Price talk on the first-lien loan is Libor plus 500 basis points with a 1.25% Libor floor and an original issue discount of 99, and talk on the second-lien loan is Libor plus 875 bps with a 1.25% floor and a discount of 981/2, the source continued.

There is 101 soft call protection for one year on the first-lien term loan and call protection of 103 in year one, 102 in year two and 101 in year three on the second-lien loan.

In addition to the term loans, the company is getting a $125 million ABL revolver led by Bank of America Merrill Lynch.

Proceeds will be used to refinance existing debt and pay a dividend to shareholders.

Leverage through the first-lien is 3.2 times, and total leverage is 3.9 times.

Smart & Final is a Commerce, Calif.-based operator of food and restaurant supply stores.

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