EarthLink Inc., the internet service provider, set the rate it will pay on a $300 million term loan B it’s seeking to refinance debt, according to a person with knowledge of the transaction.
The debt maturing in February 2019, will pay interest at 4 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.
EarthLink 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 person said.
The loan must be drawn within 35 days on closing, according to the person. Investors will not be paid a fee during the first ten days, then half of the drawn spread for the next 10 days and the full spread thereafter, said the person.
Bank of America Corp., Credit Suisse Group AG, Deutsche Bank AG and Regions Financial Corp. are arranging the financing and commitments are due Feb. 28.