Men’s Wearhouse Sells $600 Million Bonds for Acquisition

Men’s Wearhouse Inc. borrowed $600 million to help finance the acquisition of Jos. A. Bank Clothiers Inc. in its first bond sale in a decade.

The Houston-based retailer sold 7 percent, eight-year notes that paid 461 basis points more than similar-maturity Treasuries, according to data compiled by Bloomberg. The notes offering is Men’s Wearhouse’s first since 2004, Bloomberg data show. A basis point is 0.01 percentage point.

Men’s Wearhouse agreed in March to buy its smaller competitor for about $1.8 billion in cash after a five-month takeover battle. Proceeds will be used, along with a $1.1 billion term loan and cash on hand, to fund the deal, according to a June 6 statement by Moody’s Investors Service.

Moody’s assigned the notes a B2 grade, reflecting the issue’s “unsecured position, ranking behind a meaningful amount of secured debt in the company’s capital structure,” including the term loan and a $500 million secured revolving credit line.

High-yield, high-risk debt is ranked below Baa3 by Moody’s and lower than BBB- at Standard & Poor’s.

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