BC Partners is returning to the leveraged-loan market to get a better deal on a $4.3 billion loan that financed its buyout of PetSmart Inc. less than two months ago, according to a person with knowledge of the deal.
The company is asking lenders to lower the interest rate by 1 percentage point, said the person, who asked not to be identified because the financing is private. That represents $43 million of annual interest savings for BC Partners, which completed its $8.7 billion purchase of PetSmart in March.
The power has shifted into the hands of speculative-grade borrowers after the supply of new loans this year plummeted in a regulatory crackdown aimed at curbing risky deals. Just this week Onex Corp. sought to cut the rate on about $2.4 billion of loans that financed its buyout of SIG Combibloc Group AG in March.
PetSmart’s buyout loan currently pays interest at 4 percentage points more than the London interbank offered rate, with a 1 percent minimum on the lending benchmark, according to data compiled by Bloomberg. The pet-store chain is seeking to reduce the spread over Libor to 3 percentage points, and investors are asked to commit to the deal by May 8, the person said.