Linens 'n Things outlines plans for $600 million revolver, $650 million bonds for LBO by Apollo

By Sara Rosenberg

New York, Nov. 9 - Linens 'n Things Inc. has received a commitment for a $600 million senior secured asset-based revolving credit facility and plans to issue up to $650 million of high-yield bonds for its leveraged buyout by Apollo Management LP and co-investors, the company revealed in 8-K filed with the Securities and Exchange Commission Wednesday.

The five-year revolver will carry an initial interest rate of Libor plus 150 basis points and a 50 bps undrawn fee, the filing said. Pricing will be based on availability and can range from Libor plus 100 to 175 bps.

There is a $100 million accordion feature under the revolver.

UBS will act as lead arranger and administrative agent on the revolver. Bear Stearns will be syndication agent, and UBS and Bear Stearns will act as joint bookrunners.

The bonds will come in the form of secured or unsecured senior floating- or fixed-rate notes, the filing said.

As a backup for the notes, the company received a commitment for a $650 million one-year senior bridge loan. Bear Stearns will be lead arranger and administrative agent on the bridge facility, UBS will act as syndication agent, and Bear Stearns and UBS will act as joint bookrunners.

The company also plans to use a $633.4 million equity investment for LBO financing as well.

Under the acquisition agreement, a company, newly formed and controlled by Apollo along with co-investors that include NRDC Real Estate Advisors I LLC, will pay $28.00 per share in cash for Linens 'n Things for a total transaction value of $1.3 billion.

The debt financing for the transaction is subject to various conditions, including Linens 'n Things achieving EBITDA of not less than $140 million for the full 2005 fiscal year and comparable net sales of not less than negative 6% for the fourth quarter. The company's EBITDA, prior to adjustments, for the first thirty-nine weeks of 2005, was $54.5 million on an unaudited basis. Comparable store sales for fiscal October were negative 8.4%.

The LBO is expected to close in the first or early second quarter of 2006 and is subject to customary closing conditions, including stockholder approval, completion of debt financing and expiration of antitrust waiting periods.

Linens 'n Things is a Clifton, N.J., retailer of home textiles, housewares and home accessories.

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