Gold Toe sets Oct. 5 launch for $380 million credit facility

By Sara Rosenberg

New York, Sept. 28 - Gold Toe Investment Corp. has scheduled a bank meeting for the afternoon of Oct. 5 in New York to launch its proposed $380 million credit facility, according to a market source.

Bear Stearns is the lead bank on the deal.

The facility consists of a $50 million revolver, a $225 million first-lien term loan and a $105 million second-lien term loan, the source said, adding that price talk is still to be determined.

Proceeds will be used to help fund the leveraged buyout of Gold Toe by The Blackstone Group and simultaneous merger with Moretz Inc.

The LBO/merger transaction is valued at about $400 million.

Total leverage will be around 6 times on an 8.3 times valuation, the source said. Adjusted EBITDA is around $55 million and interest coverage is around 2 times.

In connection with the deal, the outstanding indebtedness and preferred stock of Gold Toe's wholly owned subsidiary Gold Toe Corp. will be refinanced, including its 10 1/8% senior subordinated notes due 2008 and 12½% senior exchangeable preferred stock due 2010.

As a result of its investment, Blackstone will be the majority owner of the company, John Moretz, chief executive officer, will be the second largest shareholder and an affiliate of Vestar Capital Partners, the current majority owner of Gold Toe, will retain a minority stake.

Gold Toe is a New York-based hosiery company. Moretz is a Newton, N.C.-based sockwear manufacturer and private labeler for the sporting goods market and retailers.

The combined company will have "huge market share" in both department stores and sports stores and will generate a lot of cash, the source remarked. It will be No. 2 in market share of socks nationwide.

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