Ancestry.com Inc. (ACOM), the world’s largest family-history website, increased the discount at which it’s selling a $670 million covenant-lite term loan backing the company’s buyout by Permira Advisers LLP, according to a person with knowledge of the transaction.
The six-year debt will now be sold at 96 cents on the dollar, compared with a previously proposed range of 98 cents to 99 cents, said the person, who asked not to be identified because the information is private. The increase in the discount reduces proceeds for the company and boosts the yield to investors.
The loan will pay interest at 5.75 percentage points more than the London interbank offered rate with a 1.25 percent floor, according to the person.
Leverage, or debt to earnings before interest, taxes, depreciation and amortization, will be 5.6 times, the person said. The debt is rated B1 by Moody’s Investors Service and B+ by Standard & Poor’s.
The interest on the loan will increase if the company sells incremental debt at a higher yield, said the person. Under a so- called most-favored-nation clause, the spread on the financing may be increased by as much as 25 basis points. A basis point is 0.01 percentage point.
Barclays Plc, Morgan Stanley, Credit Suisse Group AG, Deutsche Bank AG and Royal Bank of Canada are arranging the financing and commitments were due by 2 p.m. today in New York, according to the person.
Permira is acquiring the Provo, Utah-based company for $32 a share in a transaction valued at $1.6 billion, according to an Oct. 22 company statement. That’s a 41 percent premium over Ancestry.com’s closing price on June 5.
Heather Erickson, a spokeswoman for Ancestry.com and Nathaniel Garnick, a spokesman for Permira, didn’t immediately respond to an e-mail seeking comment.
Covenant-lite debt doesn’t carry typical lender protection such as financial-maintenance requirements.
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