Dec. 18 (Bloomberg) -- TCW Group Inc. reduced the rate it will pay on a $355 million covenant-lite term loan B backing the money manager’s buyout by Carlyle Group LP, according to a person with knowledge of the transaction.
The seven-year debt will pay interest at 3 percentage points more than the London interbank offered rate, down from 3.25 percentage points, said the person, who asked not to be identified because the information is private. The Libor floor remains unchanged at 1 percent.
TCW is proposing to sell the loan at 99.5 cents on the dollar, compared with a range of 99 cents to 99.5 cents previously offered, the person said. The decrease in discount increases proceeds for the company and reduces 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, according to data compiled by Bloomberg.
JPMorgan Chase & Co., Bank of America Corp. and Morgan Stanley are arranging the financing for the Los Angeles-based company, which is also seeking a $50 million five-year revolving line of credit, the data show.
Carlyle Group is acquiring TCW from Société Générale for an undisclosed amount and as part of the transaction TCW management and employees will increase their ownership in the company to about 40 percent, according to an Aug. 9 company statement. The deal is expected to close in the first quarter of 2013.
Randall Whitestone, a spokesman for Carlyle, and Peter Viles, a spokesman for TCW Group, declined to comment.
Covenant-lite debt doesn’t carry typical lender protection such as financial-maintenance requirements.
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