Red Lobster launches $375 million term loan at Libor plus 475-500 bps

By Sara Rosenberg

New York, June 25 – Red Lobster Management LLC launched its $375 million seven-year covenant-light term loan B on Wednesday with price talk of Libor plus 475 basis points to 500 bps with a 1% Libor floor and an original issue discount of 99, according to a market source.

The term loan has 101 soft call protection for six months, the source said.

The company’s $425 million credit facility (B) also includes a $50 million revolver.

Commitments are due on July 9.

Deutsche Bank Securities Inc., GE Capital Markets and Jefferies Finance LLC are leading the debt.

Proceeds will be used to help fund the buyout of the company by Golden Gate Capital from Darden Restaurants Inc. for $2.1 billion in cash.

Other funds for the transaction will come from a fully executed $1.5 billion sale-leaseback agreement with American Realty Capital Properties Inc.

Darden expects to receive net cash proceeds, after tax and transaction costs, of about $1.6 billion, of which around $1 billion will be used to retire outstanding debt and roughly $500 million to $600 million will be deployed for a new share repurchase program in fiscal 2015.

Closing is expected in Darden’s first fiscal quarter of 2015, subject to customary conditions and regulatory approvals. The transaction is not subject to shareholder approval or financing.

Red Lobster is an Orlando, Fla.-based casual dining seafood restaurant company.

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