Hudson’s Bay Said to Boost Loan Size, Rate for Saks Acquisition

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Hudson’s Bay Co. (HBAYF), Canada’s biggest department-store operator, increased the size and interest rate for the loans it’s seeking to support its purchase of luxury retailer Saks Inc. (SKS), according to a person with knowledge of the transaction.

A $2 billion, seven-year term loan, increased from $1.9 billion, may now pay interest at 3.75 percentage points to 4 percentage points more than the London interbank offered rate, up from an initially proposed range of 3.25 percentage points to 3.5 percentage points more than the lending benchmark, said the person, who asked not to be identified because terms aren’t set. Libor will have a 1 percent minimum.

The company added a $300 million second-lien term portion that expires in eight years and replaces a senior unsecured bond that Hudson’s Bay had considered offering, the person said. While the interest rate hasn’t yet been proposed, the lending benchmark will have a 1 percent minimum.

Bank of America Corp. is leading the financing and requests that lenders to the $2 billion piece submit commitments by 5 p.m. today in New York. The debt is being offered at 99 cents on the dollar.

A lender call to discuss the second-lien slice will take place on Oct. 7.

Hudson’s Bay agreed to buy New York-based Saks for $2.4 billion.

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.