Dunkin' Brands talks $400 million term B-2 at discount of 981/2-99

By Sara Rosenberg

New York, July 30 - Dunkin' Brands Inc. launched its $400 million add-on senior secured term loan B-2 due Nov. 23, 2017 on Monday with an original issue discount of 98½ to 99, according to a market source.

As previously reported, price talk on the loan is Libor plus 300 basis points with a 1% Libor floor.

The maturity, coupon and floor on the term loan B-2 are the same as the existing term loan B.

Barclays Capital Inc., J.P. Morgan Securities LLC and Morgan Stanley Funding Inc. are the joint bookrunners on the deal.

Proceeds from the new loan will be used to return capital to shareholders and for general corporate purposes.

The company's board of directors authorized a program to repurchase up to $500 million of its outstanding common stock over a period of two years.

Also, a third quarter cash dividend of $0.15 per share has been declared, payable to shareholders on Aug. 24.

With the add-on, the company is seeking amendments to its existing credit facility.

Under the amendment, the accordion feature will be $350 million plus an additional amount, such that first-lien leverage is less than or equal to 5.25 times, or 5.5 times total secured leverage in the case of junior secured debt, pro forma for the proposed add-on, a second source remarked.

Also, the restricted payments basket will be amended to allow for the one-time $450 million distribution of capital to shareholders, and a dividend basket will be created to allow for the payment of dividends of up to 50% of the average of the prior four quarters' free cash flow.

Furthermore, the excess cash flow sweep leverage level trigger points will be changed so that the sweep is 50% if leverage is greater than 5.5 times, 25% if leverage is 5.5 times or less and 0% if leverage is 4.75 times or less, the source added.

Dunkin' Brands is a Canton, Mass.-based franchisor of quick-service restaurants serving hot and cold coffee and baked goods as well as hard-serve ice cream.

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