Feb. 14 (Bloomberg) -- Iceland Foods Ltd., the U.K. budget grocery chain, received approval from lenders to lower the interest margin on about $1.4 billion of loans, a person with knowledge of the matter said.
Iceland reduced the margin on its 300 million-pound ($465 million) term loan A financing by 50 basis points, or 0.5 percentage points, according to data compiled by Bloomberg. The company also cut interest on its 265 million-pound term loan B1 facility, its 353 million-euro ($471 million) B2 tranche and a 25 million-pound credit line. In exchange for accepting the lower margins, lenders receive a fee of 25 basis points, the data show.
Banks and other lenders got a better deal than the Deeside, Wales-based company originally proposed. Earlier this month, Iceland sought a 75 basis-point reduction in margin for the term loan B2 in exchange for a fee of just 12.5 basis points, Bloomberg data show.
Keith Hann, a spokesman for Iceland, declined to comment.
Lenders are beginning to resist pressure from borrowers to re-price loans to take advantage of an improvement in credit markets after requests to cut margins on at least $3.4 billion of European leveraged loans this year. Carlyle Group LP canceled plans on Feb. 11 to reduce the rate it pays on a $2.3 billion so-called covenant-lite loan backing its buyout of DuPont Co.’s auto-paint unit, according to data compiled by Bloomberg.
Iceland originally raised the loans in March 2012 to back a 1.45 billion-pound acquisition by its management. The term loan A, term loan B2 and revolving credit facilities each paid an initial margin of 500 basis points more than the London interbank offered rate, while the term loan B1 paid a 550 basis-point margin, Bloomberg data show.
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