TransFirst Said to Reduce Rate on $400 Million Loan for Payout

TransFirst Holdings Inc. cut the interest rate it will pay on a $400 million first-lien term loan and increased the second-lien portion by $25 million to $225 million, according to a person with knowledge of the transaction.

The first-lien term piece will now pay 5 percentage points more than the London interbank offered rate, down from 5.25 percentage points previously offered, said the person, who asked not to be identified because the information is private. The Libor floor remains at 1.25 percent.

TransFirst 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 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 second-lien portion pays interest at 9.75 percentage points more than Libor with a 1.25 percent floor and will be sold at 97 cents, according to the person.

Second-lien creditors are being offered hard-call protection of 102 cents during the first year and 101 cents in the second year.

Proceeds will be used to refinance existing debt, redeem a portion of the sponsor’s preferred equity and fund a dividend, the person said. The first-lien debt is rated B1 by Moody’s Investors Service and B by Standard & Poor’s, while the second-lien portion is graded Caa2 and CCC+.

Bank of America Corp. and GE Capital Markets, the lending unit of General Electric Co., are arranging the financing for Hauppauge, New York-based provider of payment processing services, the person said. The debt is expected to be distributed to investors tomorrow and close next week.

Brooke Sacrider, a spokeswoman for the TransFirst, didn’t immediately respond to an e-mail seeking comment.

First-lien debt is repaid first in a bankruptcy or liquidation, second-lien debt is repaid next.

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