IMG Said to Increase Rate on $2.35 Billion Term Loan for Buyout
A $1.9 billion first-lien loan that is due in seven years will now pay interest at 4 percentage points to 4.25 percentage points more than the London interbank offered rate, compared with 3.25 percentage point to 3.5 percentage points initially offered, according to a person with knowledge of the deal, who asked not to be identified without authorization to speak publicly.
IMG, which traces its roots to a handshake between its founder Mark McCormack and golf legend Arnold Palmer in 1960, will be paying rates comparable to the average yield of similar loans, according to data compiled by Bloomberg. The New York-based company is being purchased by William Morris Endeavor Entertainment LLC and its investor Silver Lake for about $2.4 billion.
A $450 million, eight-year junior loan will pay interest at 7.25 percentage points more than Libor, compared with 6.75 percentage points, the person said. Both loans have a 1 percent minimum on the lending benchmark and are being offered at 99 cents on the dollar. A discount to par increases yield for investors and reduces proceeds for the company.
Christian Muirhead, a spokesman for William Morris, didn’t immediately return a telephone call seeking comment on the change in loan rates.
The group is purchasing the company from Forstmann Little & Co., which bought IMG in 2004.
The debt is being arranged by JPMorgan Chase & Co. and commitments are due by 5 p.m. today in New York, according to the person.
Moody’s Investors Service assigned a B2 corporate family rating, five levels below investment grade, for the combined entity, according to a Feb. 26 report.
The average yield of first-lien institutional loans rated single B by Moody’s that mature in about seven years is 4.94 percent, Bloomberg data show.
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