Talbots plans new $200 million term loan

By Sara Rosenberg

New York, Feb. 5 - Talbots Inc. is getting a new $200 million unsecured term loan from its majority shareholder, Aeon Co. Ltd., according to an 8-K filed with the Securities and Exchange Commission on Thursday.

Pricing on the loan is Libor plus 600 basis points.

The loan will have an initial six-month term, extendable at the company's option for up to five additional six-month periods.

The loan will contain no financial covenants and will have no scheduled amortization.

Proceeds will be used to pay in full the company's existing acquisition term loan debt.

Talbots anticipates that fiscal 2009 cash flow will improve by about $75 million as a result of the new loan.

Closing is expected to take place in the first quarter, subject to due diligence by Aeon, and the preparation and execution of definitive loan documentation.

In addition to the new term loan, Aeon expects to provide guarantees of Talbots other outstanding bank debt.

The proposed financing requires waivers from certain of the company's current lenders. Discussions with these lenders are currently in process.

Talbots is a Hingham, Mass.-based specialty retailer and direct marketer of women's apparel, shoes and accessories.

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