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Hudson’s Bay Said to Propose Rate on $1.9 Billion Buyout Loan

Hudson’s Bay Co. (HBAYF), Canada’s biggest department-store operator, proposed the interest rate on a $1.9 billion, seven-year term loan it’s seeking to support its purchase of luxury retailer Saks Inc. (SKS), according to a person with knowledge of the transaction.

The covenant-light loan, meaning there are no financial-maintenance requirements, may pay interest at 3.25 percentage points to 3.5 percentage points more than the London interbank offered rate, with a 1 percent minimum on the lending benchmark, said the person, who asked not to be identified because the terms aren’t public.

Lenders are offered the debt at 99 cents on the dollar, the person said, reducing proceeds for the borrower and boosting the yield for investors. Bank of America Corp. and Royal Bank of Canada are arranging the financing and request lenders submit commitments by Oct. 3, the person said.

Hudson’s Bay agreed to buy New York-based Saks for $2.4 billion. The transaction includes a $900 million unsecured bridge portion, according to a July 29 regulatory filing.

Bridge facilities are short-term loans that usually mature in one year and are often used as backstops to bond offerings or longer-dated bank debt.

To contact the reporter on this story: Krista Giovacco in New York at kgiovacco1@bloomberg.net.

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net.

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