Petco Animal Said to Seek Lower Rate on $1.2 Billion Term Loan

Petco Animal Supplies Inc. is seeking to lower the rate it pays on a $1.2 billion term loan, according to a person with knowledge of the transaction.

The interest on the debt due in 2017, will be reduced to 3 percentage points more than the London interbank offered rate and be sold at par, said the person, who asked not to be identified because the information is private. Libor, a rate banks say they can borrow in dollars from each other, will have a 1 percent floor.

Lenders are being offered six months of soft-call protection of 101 cents, meaning the company would have to pay 1 cent more than face value to refinance the debt during the first six months.

The company’s existing term loan pays interest at 3.25 percentage points more than Libor, with a 1.25 percent floor, according to data compiled by Bloomberg. The debt was sold to investors at par and was quoted at 101.875 cents today, the data show.

Credit Suisse Group AG is arranging the transaction and will host a lender call tomorrow at 3 p.m. in New York, according to the person. Investors will have until Jan. 30 to let the bank know if they will participate in the deal.