G-III Apparel launches $350 million term B at Libor plus 450-475 bps

By Sara Rosenberg

New York, Sept. 16 – G-III Apparel Group Ltd. launched on Friday its $350 million six-year term loan B (B1/BB+) with price talk of Libor plus 450 basis points to 475 bps with a 1% Libor floor and an original issue discount of 99, according to a market source.

The term loan has 101 soft call protection for six months, the source said.

Also, the term loan has a first-lien net debt to EBITDA covenant and an incremental allowance of $175 million plus an unlimited amount up to 3.25 times first-lien net leverage subject to 50 basis points MFN for 12 months.

Mandatory prepayments on the term loan are from 100% of debt issuances, excluding permitted debt, 100% of net asset sales proceeds and net insurance proceeds in excess of an annual amount to be agreed, subject to a reinvestment period, and 50% excess cash flow sweep, stepping down to 25% at 3.25 times senior secured net leverage and 0% at 2.75 times senior secured net leverage.

The company’s $1 billion senior secured credit facility also includes a $650 million five-year ABL revolver.

Based on a recent filing with the Securities and Exchange Commission, pricing on the revolver is expected to range from Libor plus 125 bps to 175 bps based on excess availability. Initial pricing is anticipated to be Libor plus 150 bps.

The filing also said that undrawn pricing on the revolver is 25 bps, and the upfront fee is 37.5 bps.

The incremental allowance under the revolver is for up to $750 million in aggregate commitments.

Barclays and J.P. Morgan Securities LLC are the joint lead arrangers on the term loan, and Barclays, JPMorgan and Bank of America Merrill Lynch are the joint lead arrangers on the revolver.

Commitments are due by noon ET on Sept. 30.

Proceeds will be used to help fund the acquisition of Donna Karan International Inc. and replace an existing $450 million ABL revolver.

Under the agreement, Donna Karan is being bought from LVMH Moet Hennessy Louis Vuitton for $650 million, subject to customary adjustments at closing.

Other funds for the transaction will come from $75 million of newly issued G-III common stock to LVMH and a $75 million 6.5-year seller note.

Total net leverage will be 3.1 times, based on LTM second quarter pro forma adjusted EBITDA.

Closing is expected late this year or early next year, subject to certain conditions.

G-III Apparel is a New York-based designer, manufacturer and marketer of branded apparel and accessories.

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