Feb. 13 (Bloomberg) -- Aramark Corp., the food concessionaire taken private in 2007, is seeking as much as $1 billion in term loans to redeem a portion of a bond coming due in 2015.
The add-on term loan will pay interest at 3 percentage points more than the London interbank offered rate, according to a person with knowledge of the transaction 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, the person said.
Aramark 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.
JPMorgan Chase & Co., Goldman Sachs Group Inc., Bank of America Corp., Barclays Plc and Wells Fargo & Co. are arranging the financing, according to the person.
The debt will be an addition to Aramark’s March 2010 credit pact, the Philadelphia-based company said in a regulatory filing today. The loan began paying interest at 3.25 percentage points more than the Libor when it was obtained, according to data compiled by Bloomberg.
Proceeds will redeem a portion of Aramark’s $1.28 billion of 8.5 percent notes. The bond traded at 100.625 cents on the dollar today, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
The company is also seeking to extend the duration on its $550 million revolving line of credit and amend certain requirements under the agreement, according to the filing. The debt, obtained in 2007, began paying interest at 3.25 percentage points more than Libor, Bloomberg data show.
Aramark was purchased for about $8.3 billion in January, 2007 by an investor group including Chairman Joseph Neubauer, GS Capital Partners, CCMP Capital Advisors, JPMorgan Partners, Thomas H. Lee Partners and Warburg Pincus LLC.
In a revolving credit line, money can be borrowed again once it’s repaid; in a term loan it can’t.
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