AlliedBarton Said to Cut Rate on Blackstone Dividend Financing

AlliedBarton Security Services LLC cut the rate on $1.2 billion of loans it’s seeking to help pay its owner Blackstone Group LP a dividend and refinance debt, according to a person with knowledge of the transaction.

An $840 million first-lien loan will pay interest at 3.25 percentage points more than the London interbank offered rate and a $365 million second-lien piece will have a spread of 7 percentage points, said the person, who wasn’t authorized to speak publicly. The margin for each loan is 0.25 percentage point lower than Allied initially marketed to investors and Libor will have a 1 percent floor.

AlliedBarton, purchased by Blackstone in 2008, may also use proceeds to fund acquisitions, said the person. The Conshohocken, Pennsylvania-based provider of security personnel for locations such as shopping malls and hospitals had its rating cut by Moody’s Investors Service to B2, or five levels below investment-grade, because of the increased debt.

Credit Suisse Group AG is arranging the financing for AlliedBarton and investors are asked to let the bank know by 5 p.m. today in New York whether they will participate in the deal, according to the person.

The first-lien will be sold for 99.5 cents on the dollar, and the second lien portion for 99.25 cents, said the person. Both loans are covenant-light, meaning they lack financial maintenance provisions that help protect investors.

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