(Bloomberg)—Toys “R” Us Inc. is close to getting a cheaper rate on an operating loan that could help with the retail chain’s efforts reorganize in bankruptcy, according to a person with knowledge of the matter.
While the company has a total of $3.1 billion in bankruptcy financing, including a $1.85 billion asset-backed revolver, the improved rate comes on a $450 million term loan. Initial talk for the loan, which is syndicated and fully funded, was a price of Libor plus 750 basis points, or 7.5 percentage points; now a rate of Libor plus 675 basis points is being discussed, according to the person, who asked not to be identified because the discussions are private.
The terms will potentially save the company around $4.4 million in interest over the lifetime of the loan, according to data compiled by Bloomberg. The terms also improved on the original-issue discount, giving Toys "R" Us 99.5 percent of the loan’s funds, rather than 99 percent.
JPMorgan Chase & Co. is the lead agent on the 16-month loan, and Citigroup Inc., Deutsche Bank AG, Goldman Sachs Group Inc. and Barclays Plc are joint arrangers and book runners, according to court papers.
Though Toys "R" Us has temporary permission to draw on the "debtor-in-possession," or DIP, financing, a court hearing to seek approval of its final terms is scheduled for Oct. 10. The Wayne, N.J.-based company has said it wants to pay $96.5 million to agents, arrangers and lenders for the financing.
The case is In re TRU-SVC, 17-34659, U.S. Bankruptcy Court, Eastern District of Virginia (Richmond).
To contact the reporters on this story: Lara Wieczezynski in Princeton at [email protected]; Tiffany Kary in New York at [email protected] To contact the editors responsible for this story: Nikolaj Gammeltoft at [email protected] Kenneth Pringle, Rick Green
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