Kenneth Cole details $165 million credit facility for buyout

By Sara Rosenberg

New York, June 7 - Kenneth Cole Productions Inc. disclosed in an SC 13D filed with the Securities and Exchange Commission on Thursday that it will be getting a $165 million five-year covenant-light senior secured credit facility with its acquisition by chairman and chief creative officer, Kenneth D. Cole.

The facility consists of a $110 million revolver, of which up to $60 million can be used for the buyout, and a $55 million term loan.

Initial pricing on the revolver is expected at Libor plus 200 basis points with a 37.5 bps unused fee. The spread can range from Libor plus 175 bps to 225 bps based on average monthly excess availability.

Pricing on the term loan is expected to be Libor plus 850 bps with a 1% Libor floor.

The term loan has call protection of 102 in year one and 101 in year two. Up to $10 million of the loan, however, can be repaid without having to pay the call premiums.

Amortization on the term loan is quarterly installments of $750,000, with any outstanding balance due at maturity.

Wells Fargo Capital Finance LLC is the sole lead arranger and bookrunner on the deal.

Under the agreement, Cole, through a newly formed entity named KCP Holdco Inc., will acquire the company for $15.25 per share in cash. The transaction has a total enterprise value of about $245 million.

Other funds for the buyout will come from about $35 million of equity.

Closing is subject to receipt of shareholder approval and other customary conditions.

Kenneth Cole Productions is a New York-based designer and marketer of footwear, handbags, apparel and accessories.

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