Toys ‘R’ Us Seeks Loans; Prices Set to Climb Most Since January

Toys “R” Us Inc. is seeking a $985 million term loan to refinance debt as the price of the floating-rate debt is poised to record the biggest monthly gain since January.

The retailer is looking to lower interest expense by refinancing its $950 million of 10.75 percent notes, according to a regulatory filing today. Goldman Sachs Group Inc. is leading the financing, according to a person with knowledge of the transaction who asked not to be identified because the deal is private.

The Wayne, New Jersey-based company is proposing to pay interest at 5 percentage points to 5.25 percentage points more than the London interbank offered rate on the loan due in 2019, with a 1 percent minimum on the lending benchmark, according to two people familiar with the terms. It’s being offered to lenders at 99 cents on the dollar.

Fresenius SE, Germany’s biggest operator of private hospitals, is seeking to borrow $500 million in a six-year term loan, according to a person familiar with that offering, who asked not to be identified because the terms aren’t set.

The deals add to more $39.5 billion of loans in general syndication, according to data compiled by Bloomberg, amid a rebound in leveraged loans. The prices on the largest first-lien debt, which suffered their first losses in more than a year in June, have gained 1.26 cents to 98.39 cents on the dollar this month, according to the Standard & Poor’s/LSTA U.S. Leveraged Loan 100 index. They had increased 1.5 cents in January.

LightSquared Plan

A group of lenders proposed a reorganization plan for LightSquared Inc., the wireless broadband company controlled by Philip A. Falcone’s Harbinger Capital Partners LLC.

LightSquared, which filed for bankruptcy protection in May 2012, put allocation plans for first-lien term loan on hold last week as it awaits judgment from bankruptcy court.

Fresenius is offering to borrow at 2.25 percentage points more than Libor, with no minimum on the lending benchmark. Bank of America Corp., Deutsche Bank AG and JPMorgan Chase & Co. are helping arrange the financing.

Leveraged loans are a form of high-risk debt that carry ratings of less than Baa3 by Moody’s Investors Service and below BBB- at S&P. Investors poured a record $1.8 billion last week into funds that purchase loans in the U.S., according to Bank of America.

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