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NPC International Sets Rate on $375 Million Refinancing Loan

NPC International Inc., a Pizza Hut franchisee, set the interest rate it will pay on a $375 million term loan the company is seeking to refinance debt, according to a person with knowledge of the transaction.

The debt, due in December 2018, will pay interest at 4 percentage points to 4.25 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 say they can borrow in dollars from each other, will have a 1.25 percent minimum.

“This is somewhat wider than we expected in light of some of the fairly tight price talk we have been seeing of late on loan deals,” Barbara Cappaert, a bond analyst at Vermont-based KDP Investment Advisors Inc., wrote today in a note. The expected interest rate is attractive, she wrote.

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.

Barclays Plc is arranging the refinancing and lenders must submit commitments by March 21 at 5 p.m. in New York, the person said.

The company’s existing term loan pays 5.25 percentage points more than Libor with a 1.5 percent minimum on the benchmark, according to data compiled by Bloomberg. The debt was sold to investors at 98 cents on the dollar, the data show.

Olympus Partners, a Stamford, Connecticut-based private-equity firm, purchased NPC from Bank of America Corp. for $775 million in December 2011, Bloomberg data show.

Paul Rubin, a partner at Olympus Partners, didn’t immediately respond to an e-mail seeking comment.

In a revolving credit facility, money can be borrowed again once it’s repaid; in a term loan it can’t.

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