Del Monte Foods ups term loan to $2.7 billion, cuts spread to Libor plus 300 basis points

By Sara Rosenberg

New York, Jan. 31 - Del Monte Foods Co. upsized its covenant-light seven-year term loan (Ba3/B+/BB) to $2.7 billion from $2.5 billion and reduced pricing to Libor plus 300 bps from Libor plus 400 bps, according to a market source.

In addition, the original issue discount tightened to 99¾ from 99, and 101 soft call protection for one year was added, the source said.

The Libor floor was left unchanged at 1.5%.

Recommitments are due on Tuesday.

The company's now $3.45 billion credit facility, up from $3.25 billion, still includes a $750 million five-year ABL revolver (NA/NA/BB).

Proceeds from the credit facility, notes and $1.6 billion of equity will be used to help fund the acquisition of the company by Kohlberg Kravis Roberts & Co. LP, Vestar Capital Partners and Centerview Partners for $19.00 per share in cash. The transaction is valued at $5.3 billion, including the assumption of $1.3 billion of net debt.

The bond offering was downsized to $1.3 billion from $1.5 billion as a result of the term loan upsizing. Price talk on the notes is in the 7.75% area.

JPMorgan, Barclays, Morgan Stanley, Bank of America and KKR Capital Markets are the lead banks on the credit facility.

Completion of the transaction is anticipated by the end of March, subject to customary closing conditions, including receipt of shareholder and regulatory approvals.

Del Monte is a San Francisco-based branded pet and consumer products company.

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