Sara Lee subsidiaries get $3.6 billion bridge loans ahead of spinoff

By Angela McDaniels

Tacoma, Wash., June 1 - Sara Lee Corp. subsidiaries DE US, Inc. and DEMB International BV each entered into a $1.8 billion senior bridge loan on Tuesday.

The $3.6 billion of bridge loans contain substantially identical terms, including an interest rate of Libor plus 125 basis points, according to an 8-K filing with the Securities and Exchange Commission.

Sara Lee plans to spin off its international coffee and tea businesses. To carry out the spinoff, Sara Lee will distribute all of the common stock of DE US to its shareholders. The distribution is expected to be made on June 28. DE US will then be acquired by D.E Master Blenders 1753 BV, a Utrecht, Netherlands-based holding company.

DE US may draw on its bridge loan once the distribution is complete and other conditions are met. The proceeds will be used to fund a special cash dividend of $3 per share to DE US shareholders immediately following the distribution.

DEMB International may draw on its bridge loan once DE US' bridge loan is funded and other conditions are met. The proceeds will be used to repay DE US' bridge loan, and DEMB will use cash on hand to satisfy its obligations under its own bridge loan.

The bridge loans must be repaid in full within five business days of the initial draw under DE US' bridge loan.

Bank of America, NA is the administrative agent, and Goldman Sachs Bank USA and JPMorgan Chase Bank, NA are the syndication agents. Bank of America Merrill Lynch, Goldman Sachs Bank and J.P. Morgan Ltd. are the lead arrangers and bookrunners.

A $500,000 structuring fee will be paid to each of the lenders for their participation in the bridge loans.

DE US' bridge loan has no guarantors. DEMB International's bridge loan is guaranteed by D.E Master Blenders 1753 and Sara Lee/DE BV.

The bridge loans will be prepayable and cancelable at any time and without penalty. Each bridge loan must be prepaid if its borrower issues preferred equity interests.

The covenants require the borrowers to maintain enough excess cash to repay the bridge loans and include limitations on debt and acquisitions.

Sara Lee manufactures and markets brand-name consumer products focused primarily on meats, bakery, beverage and household products. It is based in Downers Grove, Ill.

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