Sports Authority Inc., the sporting- goods retailer controller by Leonard Green & Partners, set the interest rate it will pay on a $630 million term loan B it’s seeking to refinance debt, according to a person with knowledge of the transaction.
The seven-year loan will pay interest at 5.5 percentage points to 6 percentage points more than the London interbank offered rate, said the person, who asked not to be identified because the information is private. Libor, a rate banks say they can borrow in dollars from each other, will have a 1.25 percent floor.
Sports Authority is proposing to sell the loan at 99 cents on the dollar, the person said, reducing proceeds for the company and boosting the yield to investors.
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.
Proceeds will be used to refinance the company’s existing term loan B due in 2017 and its senior subordinated notes due 2016, according to data compiled by Bloomberg.
Sports Authority’s current term loan pays interest at 6 percentage points more than Libor, with a 1.5 percent floor, the data show. The debt was sold to investors at 97 cents and was quoted at 100.875 cent today.
Bank of America Corp., JPMorgan Chase & Co., Bank of Montreal, Credit Suisse Group AG, Royal Bank of Canada, UBS AG and Wells Fargo & Co. are arranging the deal for the Englewood, Colorado-based company. Commitments are due Nov. 13, according to the person.
Thomas Hendrickson, chief financial officer of Sports Authority, didn’t immediately respond to an e-mail seeking comment.
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