Cenveo Inc., the world’s largest envelope manufacturer, set the interest rate it will pay on a $65 million add-on term loan B to refinance debt, according to a person with knowledge of the transaction.
The debt will pay interest at 512.5 basis 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 1.5 percent floor.
Cenveo is proposing to sell the loan at 99 cents on the dollar, the person said, reducing proceeds for the company and boosting the yield to investors.
Lenders are being offered six months of soft-call protection of 101 cents from the date of the repricing, said the person, meaning the company would have to pay 1 cent more than face value to refinance the debt during the first six months.
Investors who agree to the transaction are being offered a 37.5 basis-point fee, the person said. A basis point is 0.01 percentage point.
Bank of America Corp. is arranging the transaction for the Stamford, Connecticut-based company and investors must let the bank know by June 5 if they will participate in the deal, according to the person.
The company’s existing term loan pays interest at 4.75 percentage points more than Libor, with a 1.5 percent floor and was sold to investors at 99 cents on the dollar, according to data compiled by Bloomberg.
Robert Burton Jr., president of Cenveo, didn’t immediately respond to an e-mail seeking comment.