Lawson Software Inc., a provider of business software being merged with Golden Gate Capital Corp.’s Infor Global Solutions, set the interest rate it will pay on $3.5 billion of loans it’s seeking to finance the combination, according to a person with knowledge of the transaction.
A $3.1 billion six-year term loan B will pay interest at 4.5 percentage points to 4.75 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.
A $400 million 4.5-year B-1 piece will pay interest at 4 percentage points to 4.25 percentage points more than Libor, with a 1.25 percent minimum on the benchmark, the person said.
Both portions will be sold at 99 cents on the dollar, the person said, reducing proceeds for the company and boosting the yield to investors.
The term loan B and B-1 will offer lenders 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.
Bank of America Corp., Credit Suisse Group AG, JPMorgan Chase & Co., Morgan Stanley, Barclays, Deutsche Bank AG, Royal Bank of Canada and KKR Capital Markets are arranging the financing, and investors have until March 29 to submit commitments, according to the person. The deal is expected to close and fund in early April.
$150 Million Revolver
The Saint Paul, Minnesota-based company is also seeking a $150 million revolving line of credit maturing in five years, according to data compiled by Bloomberg.
San Francisco-based Golden Gate and Infor acquired Lawson for $1.82 billion in July, according to data compiled by Bloomberg.
A spokesman for Golden Gate was not available to comment.
In a revolving credit facility, money can be borrowed again once it’s repaid; in a term loan, it can’t. A term loan B is sold mainly to non-bank lenders such as collateralized loan obligations, bank loan mutual funds and hedge funds.
Editors: John Parry, Mitchell Martin.