KKR’s Pets at Home Said to Set Rate Guidance on Dividend Loan
Pets at Home Ltd., a U.K. pet accessories supplier owned by KKR & Co. (KKR), offered guidance on a 135 million-pound ($204 million) loan backing a dividend payment, according to two people with knowledge of the deal.
The term debt maturing in 2019 will pay interest between 525 basis points and 550 basis points more than the London interbank offered rate, said the people, who asked not to be identified because the information is private. KKR and Nomura Holdings Inc., the firms arranging the transaction, are asking lenders to commit to the deal by March 19, the people said.
The dividend payment to KKR will be equivalent to about 25 percent of the private-equity firm’s original 2010 investment in the company, said the people. The loans will increase the ratio of Pets at Home’s debt to its earnings before interest, taxes, depreciation and amortization to five times from 3.7 times, the people said.
The transaction requires permission from at least two- thirds of Pets at Home’s existing lenders, the people said. Those creditors who approve the payout by March 12 will be paid 25 basis points and 15 basis points if consent is given on March 19, said the people. A basis point is 0.01 percentage point.
The Handforth, U.K.-based company raised a 130 million-pound term loan C last year to replace more costly mezzanine debt. It agreed to pay an initial interest of 550 basis points more than the Libor on that loan, according to data compiled by Bloomberg.
KKR raised 510 million pounds of buyout debt to back its acquisition of Pets at Home in 2010, Bloomberg data show.
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