Ferrara Candy Increase Rate on $425 Million Merger Financing
Ferrara Pan Candy Company Inc. increased the interest rate it will pay on a $425 million term loan B it’s seeking to finance its merger with Farley & Sathers Candy Company Inc., according to a person with knowledge of the transaction.
The six-year debt will now pay interest at 6.25 percentage points more than the London interbank offered rate, compared with a range of 5.25 percentage points to 5.5 percentage points, said the person, who declined to be identified because the terms are private. The minimum on the benchmark will remain at 1.25 percent.
Ferrara is now proposing to sell the loan at 96 cents to 97 cents on the dollar compared with 98 cents to 99 cents initially offered, the person said, reducing proceeds for the company and boosting the yield to investors.
Lenders will now receive call protection of 102 cents and 101 cents, according to the person. That means the Forest Park, Illinois-based company would have to pay 2 cents more than face value to replace the loan during the first year and 1 cent more than par to refinance the debt during the second year.
Morgan Stanley and Goldman Sachs Group Inc. are arranging the financing and investors must let the banks know by 10 a.m. tomorrow in New York whether they will participate in the deal, according to the person.
Catterton Partners currently owns Farley’s & Sathers and will remain a majority investor in the combined company, according to a May 23 statement.
Andrea Rose, a spokeswoman for Catterton Partners, declined to comment.
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