Sleepy’s Inc., the mattress retailer, set the interest rate it will pay on a $170 million term loan it’s seeking to refinance debt and fund a distribution to shareholders, according to a person with knowledge of the transaction.
The debt, due in seven years, will pay interest at 6 percentage points more than the London interbank offered rate, said the person, who declined to be identified because the terms are private. Libor, a rate banks say they can borrow in dollars from each other, will have a 1.25 percent floor.
Sleepy’s is proposing to sell the loan at 98 cents on the dollar, the person said, reducing proceeds for the company and boosting the yield to investors.
Lenders are being offered one-year 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 year, the person said.
Credit Suisse Group AG is arranging the financing for the Hicksville, New York-based company, according to data compiled by Bloomberg.
In a revolving credit facility, money can be borrowed again once it’s repaid; in a term loan, it can’t.