Dunkin’ Brands Inc. set initial price talk on a $1.25 billion term loan due in November 2017 it’s seeking to refinance debt, according to a person familiar with the transaction.
The company is proposing to pay an interest rate of 3 percentage points to 3.25 percentage points more than the London interbank offered rate, said the person who declined to be identified because the terms are private. Libor, the rate banks charge to lend to each other will have a 1.25 percent floor.
Dunkin’ Brands joins Burger King Holdings Inc., MultiPlan Inc. and TransUnion LLC who are back in the market to refinance loans put in place within as few as four months ago.
“We do not like the idea of these refinancing and are happier with the higher rates,” Barbara Cappaert, an analyst at KDP Investment Advisors Inc., wrote in a report today, noting an improvement of net leverage, or debt to earnings before interest, taxes, depreciation and amortization, of 0.1 time.
Bain Capital LLC, Carlyle Group and Thomas H. Lee Partners LP-owned Dunkin’ Brands may issue the debt at par, the person said.
Lenders must let Barclays Plc, JPMorgan Chase & Co., Bank of America Corp. and Goldman Sachs, the banks arranging the loan, know by Feb. 10 at 5 p.m. in New York if they will participate in the deal.
Leverage through the senior secured debt is 4.3 times, while total leverage is 6.6 times, the person said.
The owner of Dunkin’ Donuts and Baskin-Robbins restaurants will pay a one cent premium to refinance the existing loan, which has one-year soft-call protection of 101 cents.
The company’s existing loan is rated B1 by Moody’s Investors Services and B+ by Standard & Poor’s.