Fender Musical Instruments Corp., the maker of the iconic Stratocaster electric guitar played by artists such as Eric Clapton and John Mayer, got a $200 million loan to refinance debt, according to a person with knowledge of the matter.
The deal, due in 2019, will pay interest at 4.5 percentage points more than the London interbank offered rate with a 1.25 percent minimum on the lending benchmark, said the person, who asked not to be identified because the deal is private. The Scottsdale, Arizona-based company had initially proposed to pay 5 percentage points more than Libor.
JPMorgan Chase & Co. arranged the financing, which was sold to investors at 99 cents on the dollar, the person said.
Proceeds of the loan and a $40 million investment from its owners refinance $234 million due under a credit pact it obtained last year, according to Moody’s Investors Service, which rates the loan and debt B2.
The refinancing “will enable the company to focus on its business without being distracted by potential liquidity concerns,” Kevin Cassidy, senior credit officer at Moody’s wrote in a March 18 report.