Hostess ups term loan to $500 million, flexes to Libor plus 550 bps

By Sara Rosenberg

New York, March 7 - Hostess Snacks upsized its seven-year covenant-light first-lien term loan to $500 million from $450 million and reduced pricing to Libor plus 550 basis points from talk of Libor plus 600 bps to 625 bps, according to a market source.

Also, the original issue discount on the term loan was tightened to 99 from 981/2, the source said.

The loan still has a 1.25% Libor floor and is non-callable for two years, then at 102 in year three and 101 in year four.

Recommitments are due by 3 p.m. ET on Friday.

The company's now $560 million credit facility, up from $510 million, also includes a $60 million ABL revolver.

Credit Suisse Securities (USA) LLC and UBS Securities LLC are the joint bookrunners on the deal.

Proceeds will be used to fund the purchase of the baked snack foods business from Hostess Brands Inc. for $410 million by Apollo Global Management LLC and Metropoulos & Co.

The additional funds from the term loan upsizing will be used for general corporate purposes, which could include a potential higher bid for Hostess Snacks, a reduction of common equity or a potential bid for Drake's, a snack cake brand, the source added.

Closing is expected by the end of April, subject to approval by the United States Bankruptcy Court and customary conditions.

Hostess Brands, an Irving, Texas-based operator of regional bakeries, filed for bankruptcy on Jan. 11, 2012. Its Chapter 11 case number is 12-22052.

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