Nine Entertainment Co. set the interest rate it will pay on a A$700 ($740 million) covenant-lite term loan it’s seeking to refinance debt, according to a person with knowledge of the transaction.
The debt, due in seven-years, will pay interest at 3.25 percentage points more than the London interbank offered rate, said the person, who asked not to be identified because the information is private. Libor, a rate banks say they can borrow in dollars from each other, will have a 1 percent floor.
Nine Entertainment is proposing to sell the loan at 99.5 cents on the dollar, the person said, reducing proceeds for the company and boosting the yield to investors.
Lenders are being offered one-year soft-call protection of 101 cents, meaning the company would have to pay 1 cent more than face value to refinance the debt during the first year, the person said.
UBS AG, Deutsche Bank AG, Morgan Stanley and Nomura Holdings Inc. are arranging the financing and commitments are due Jan. 24, according to the person.
The Australian broadcaster owned by CVC Capital Partners Ltd. also is seeking a A$ 100 million five-year revolving line of credit that pays 3.25 percentage points more than Libor with a 50 basis-point fee on any unused portions, the person said.
Scott Briggs, director of corporate and regulatory affairs for Sydney-based Nine Entertainment, didn’t immediately respond to an e-mail seeking comment.
Covenant-lite debt doesn’t carry typical lender protection such as financial-maintenance requirements.