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Harbor Freight Tools Seeks $1 Billion Loan to Fund Dividend
Harbor Freight Tools USA Inc., a tool and equipment catalog retailer, will host a lender meeting April 25 at 1:30 p.m. in New York to discuss a $1 billion seven- year term loan the company is seeking to refinance debt and pay a dividend, according to a person with knowledge of the transaction.
Credit Suisse Group AG, Deutsche Bank AG and Wells Fargo & Co. are arranging the financing for the Calabasas, California- based company, said the person, who declined to be identified because the terms are private.
Lenders are being offered one-year soft-call protection of 101 cents, meaning the company would have to pay 1 cent more than face value to refinance the debt during the first year, the person said.
Leverage, or debt to earnings before interest, taxes, depreciation and amortization, will be 3.7 times for the company, the person said.
Harbor Freight Tools is also seeking a $400 million asset- based revolving line of credit being arranged by Wells Fargo & Co., according to the person.
The company’s existing term loan due in December 2017 pays interest at 5 percentage point more than the London interbank offered rate with a 1.5 percent floor, according to data compiled by Bloomberg. The debt was sold to investors at 99 cents on the dollar.
John Batten, a spokesman for Harbor Freight, didn’t immediately respond to an e-mail seeking comment.
In a revolving credit facility, money can be borrowed again once it’s repaid; in a term loan it can’t. Libor, the rate at which banks say they can borrow in dollars from each other, serves as a reference for about $360 trillion of financial instruments worldwide.
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