Dunkin’ Brands Inc., the owner of Dunkin’ Donuts and Baskin-Robbins restaurants, set the rate it will pay on a $1.85 billion term loan B it’s seeking to refinance debt, according to a person with knowledge of the transaction.
The debt, which will now mature in February 2020, will pay interest at 2.5 percentage points to 2.75 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 percent floor.
Dunkin’ Brands is proposing to sell the loan at 99.75 cents on the dollar, the person said, reducing proceeds for the company and boosting the yield to investors.
Lenders are being offered six months of 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 six months.
Leverage, or debt to earnings before interest, taxes, depreciation and amortization, will be 5.2 times total, the person said. The debt is rated B2 by Moody’s Investors Service and B+ by Standard & Poor’s.
Barclays Plc is arranging the transaction and commitments are due Feb. 7 by 5 p.m. in New York, according to the person. The company is also seeking a $100 million revolving line of credit due in February 2018 that will pay interest at 2.5 percentage points more than Libor, the person said.
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