EMI Music Publishing Said to Set Rate on $1.05 Billion Loan

EMI Music Publishing set the initial interest rate it will pay on a $1.05 billion term loan to support its acquisition by Sony Corp., according to a person with knowledge of the matter.

The company is proposing to pay 4.75 percentage points more than the London interbank offered rate on the six-year debt and the lending benchmark will have a 1.25 percent floor, said the person, who declined to be identified because the terms are private.

EMI may sell the debt at 98.5 cents on the dollar, the person said, reducing proceeds for the borrower and boosting the yield for investors.

UBS AG is arranging the transaction, and lenders must let the bank know by Feb. 15 whether they will participate in the deal, the person said.

Lenders will receive 101 soft-call protection, the person said, meaning that EMI would have to pay one cent more than face value to reprice the debt in its first year.

The financing includes a $75 million, five-year revolving line of credit that will pay 4.75 percentage points more than Libor, the person said. The credit line is subject to 75 basis points on undrawn portions. A basis point is 0.01 percentage point.

Dylan Jones, a New York-based spokesman for EMI, didn’t immediately return a phone call seeking comment.

An investor group led by Sony Corp. agreed to buy EMI from Citigroup Inc. (C) for $2.2 billion.

In a revolving credit facility, money can be borrowed again once it’s repaid; in a term loan, it can’t

To contact the reporter on this story: Krista Giovacco in New York at kgiovacco1@bloomberg.net.

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net.

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