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Vivarte Breaches Loan Terms; Harbor Freight Seeks Dividend Deal

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July 16 (Bloomberg) -- Vivarte SAS, a French retailer owned by Charterhouse Capital Partners LP, breached the terms on about 2.8 billion euros ($3.7 billion) of loans. Harbor Freight Tools USA Inc. is seeking $1 billion in debt that will help finance a dividend.

Vivarte’s ratio of earnings before interest, taxes, depreciation and amortization was 6.96 times at the end of May, more than the limit of 6.05, according to three people with knowledge of the matter, who asked not to be identified because the matter is private. The Paris-based company also breached its interest cover ratio, a measure of how easily it can pay interest.

Harbor Freight and units of Oxbow Corp. are raising funds in the U.S. leveraged loan market as prices of the debt rise. Harbour Freight, a tool and equipment retailer, is asking lenders for a covenant-light financing, meaning the debt would lack financial maintenance provisions, according to a person with knowledge of the transaction.

Credit Suisse Group AG is arranging Harbor Freight’s loan, which will also be used to refinance debt, said the person with knowledge of the deal. The Calabasas, California-based company has a B+ rating from Standard & Poor’s, four levels below investment grade, with a “stable” outlook.

Two units of Oxbow, an energy mineral miner, increased the size of a loan deal that will refinance debt to $1.8 billion from $1.75 billion.

Oxbow Financing

Oxbow Carbon LLC and Oxbow Calcining LLC expanded a revolving credit line by $200 million to $800 million, and decreased a six-year term loan by $150 million to $350 million, according to a person with knowledge of the transaction. The deal also includes a $300 million term loan due in five years and a $350 million second-lien piece that matures in 6 ½ years.

S&P revised Oxbow Carbon’s outlook to “negative” on July 1 because of weaker-than-expected performance. The ratings firm gives the carbon products distributor a BB grade. Investors have until noon tomorrow to let Bank of America Corp., the bank arranging the loans, whether they will participate in the deal, the person said.

Invesco Ltd. is raising a $413.5 million collateralized loan obligation that may price this week, according to a separate person with knowledge of the transaction.

Loans rose for a sixth straight day rose to 98.11 cents on the dollar from 98.01 cents, according to the S&P/LSTA U.S. Leveraged Loan 100 index. Leveraged loans are rated below Baa3 by Moody’s Investors Service and lower than BBB- at S&P.

To contact the reporter on this story: Christine Idzelis in New York at cidzelis@bloomberg.net

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net

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