True Religion retranches, lifts first-lien term loan spread and OID

By Sara Rosenberg

New York, July 25 - True Religion Apparel Inc. upsized its ABL revolver to $60 million from $50 million and downsized its second-lien term loan to $92.5 million from $110 million, according to a market source.

Also, pricing on the $375 million first-lien term loan, size unchanged, was increased to Libor plus 500 basis points from Libor plus 450 bps and the original issue discount was revised to 93 from 99, the source said.

Furthermore, the maturity on the first-lien term loan was shortened to six years from seven years and the maturity on the second-lien term loan was changed to 6½ years from eight years.

And, the second-lien term loan is now non-callable for one year, then at 103 in year two, 102 in year three and 101 in year four, instead of having call protection of 103 in year one, 102 in year two and 101 in year three.

The first-lien term loan still has a 1% Libor floor and 101 soft call protection for one year.

Other revisions to the deal included setting the excess cash flow sweep at 75% with a step to 50% at 2.5 times net first-lien leverage and to 25% at 1.5 times net first-lien leverage, instead of at 50% with a step to 25% at 3 times net first-lien leverage and to 0% at 2 times net first-lien leverage, and adding a $25 million cap on cash netting from having no cap.

Additionally the accordion was cut to $75 million and a maximum amount up to 2.5 times net first-lien leverage and greater of $50 million and a maximum amount up to 3.75 times net secured leverage, from greater of $100 million and maximum amount up to 3 times net first-lien leverage on the first-lien term loan and greater of $100 million and maximum amount up to 4.25 times net secured leverage on the second-lien term loan.

Lastly, the restricted payment test was moved to 4.25 times total net leverage from being subject to a 2 times fixed charge coverage ratio.

Recommitments are due at noon ET on Friday, the source added.

Deutsche Bank Securities Inc., Jefferies Finance LLC, UBS Securities LLC and Macquarie Capital (USA) Inc. are leading the now $527.5 million senior secured credit facility, down from $535 million.

Proceeds will be used to help fund the company's buyout by TowerBrook Capital Partners LP for $32 per share in cash in a transaction valued at about $835 million.

With the second-lien term loan downsizing, the cash equity contribution was increased by $9 million, and $2 million of additional cash from the balance sheet and a roughly $17 million draw on the upsized revolver will fund the larger-than-expected original issue discount on the first-lien term loan.

Closing is expected in the third quarter, subject to shareholder approval, regulatory approvals and other customary conditions.

True Religion is a Vernon, Calif.-based jeans and jeans-related sportswear company.

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