Hudson's Bay ups term B to $2 billion, adds $300 million second-lien

By Sara Rosenberg

New York, Oct. 3 - Hudson's Bay Co. increased the size of its seven-year first-lien senior secured term loan B to $2 billion from $1.9 billion and added a $300 million eight-year second-lien term loan to the capital structure, according to sources.

A call to launch the second-lien term loan will take place on Monday, sources said.

Also, price talk on the first-lien term loan B was revised to Libor plus 375 basis points to 400 bps from talk of Libor plus 325 bps to 350 bps and the 101 soft call protection was extended to one year from six months, sources said.

The 1% Libor floor and original issue discount of 99 on the first-lien term loan were unchanged.

Recommitments for the first-lien term loan were due at 5 p.m. ET on Thursday.

The company's now roughly $4 billion credit facility, up from $3.6 billion, also includes a C$750 million ABL revolver and a $950 million ABL revolver.

Bank of America Merrill Lynch and RBC Capital Markets are the lead banks on the deal.

Proceeds will be used to help fund the acquisition of Saks Inc. for $16.00 per share in an all-cash transaction valued at about $2.9 billion, including debt, and to refinance some existing debt.

Other funds for the transaction will come from $1 billion of equity, including $500 million from Ontario Teachers' Pension Plan and $250 million from West Face Capital Inc., and cash on hand.

Plans for a $400 million senior notes offering were terminated with the changes to the credit facility size, sources added.

About $357 million will be drawn under the new revolvers for the acquisition.

Closing is expected by year-end, subject to approval by Saks shareholders, regulatory approvals and other customary conditions.

The combined company would have generated in fiscal 2012 pro forma sales of about C$7.2 billion and normalized EBITDA of around C$587 million, before any synergies.

Leverage will be around 5.7 times, but the company plans on bringing that down to 2.5 times within four to five years.

Hudson's Bay is an Ontario-based operator of department stores. Saks is a New York-based retailer of clothes and accessories for men, women, children and the home.

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