Franchise Group flexes $1 billion term loan to Libor plus 475 bps

By Sara Rosenberg

New York, Feb. 24 – Franchise Group Inc. lowered pricing on its $1 billion first-lien term loan B (Ba3/BB-) to Libor plus 475 basis points from Libor plus 500 bps, according to a market source.

The term loan still has a 0.75% Libor floor and an original issue discount of 99.

Recommitments were scheduled to be due at 3 p.m. ET on Wednesday, the source said.

Previously in syndication, the first-lien term loan was upsized from $750 million as plans were cancelled for a committed $250 million last-out term loan, the Libor floor was reduced from 1% and the discount firmed at the tight end of the 98.5 to 99 talk. Also, a $300 million second-lien term loan (B3/B-) was added to replace $300 million of proposed unsecured debt.

J.P. Morgan Securities LLC, Citizens Bank and Credit Suisse Securities (USA) LLC provided the debt commitment.

Proceeds will be used to help fund the acquisition of Pet Supplies Plus and to refinance an existing term loan.

Under the agreement, Pet Supplies Plus, a Livonia, Mich.-based omnichannel retail chain and franchisor of pet supplies and services, is being bought from Sentinel Capital Partners for about $700 million.

Closing is expected in March, subject to the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other customary conditions.

Franchise Group is a Virginia Beach, Va.-based operator of franchised and franchisable businesses, including Liberty Tax Service, Buddy’s Home Furnishings, American Freight and the Vitamin Shoppe.

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