Belk updates spread talk, adjusts issue price; Diamond Resorts brings tack-on loan to market

By Sara Rosenberg

New York, Nov. 18 – Belk Inc. on Wednesday set pricing on its term loan B at the high end of guidance and widened the original issue discount, and Diamond Resorts Corp. launched a tack-on first-lien term loan to investors.

Meanwhile, in the secondary market, Shearer’s Foods LLC’s incremental term loan held steady in its second day of trading.

Belk modifies loan

Belk revised price talk on its $1.5 billion seven-year first-lien covenant-light term loan B (B2/B+) to Libor plus 475 basis points with a 1% Libor floor and an original issue discount of 89, from initial talk at launch of Libor plus 450 bps to 475 bps talk with a 1% Libor floor and a discount of 98 to 98.5, according to a market source.

The term loan still has 101 soft call protection for one year.

Last week, the term loan was downsized from $1.6 billion with the upsizing of the company’s ABL revolver to $900 million from $800 million.

The intention is to draw an additional $100 million under the revolver to make up for the lost term loan funds, a source previously explained.

Commitments for the term loan B are due at 5 p.m. ET on Thursday, the source added.

Belk being acquired

Proceeds from Belk’s credit facility will be used to help fund its buyout by Sycamore Partners for $68.00 per share in cash. The estimated enterprise value of the transaction is about $3 billion.

Morgan Stanley Senior Funding Inc., Bank of America Merrill Lynch, Jefferies Finance LLC, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Nomura Securities International Inc., RBC Capital Markets LLC and MCS Capital Markets are leading the debt.

Closing is expected this quarter, subject to customary conditions, including the receipt of regulatory and stockholder approval.

Belk is a Charlotte, N.C.-based department store company.

Diamond seeks tack-on

Diamond Resorts hosted a lender call at 2 p.m. ET on Wednesday to launch a $150 million tack-on first-lien term loan due May 2021 that is talked at Libor plus 450 bps with a 1% Libor floor and an original issue discount of 98 to 98.5, a market source said.

The spread and floor on the tack-on loan matches existing first-lien term loan pricing, and, with this transaction, all of the first-lien debt will get 101 soft call protection for six months.

Commitments are due at 5 p.m. ET on Friday, the source added.

Credit Suisse Securities (USA) LLC is leading the deal that will be used for general corporate purposes.

Diamond Resorts is a Las Vegas-based hospitality and vacation ownership company.

Shearer’s Foods steady

Over in the secondary market, Shearer’s Foods’ $225 million incremental first-lien term loan (B1/B) was quoted at 99 bid, 99½ offered, in line with where it freed up for trading on Tuesday, a trader remarked.

Pricing on the loan is Libor plus 425 bps with a 1% Libor floor, and it was sold at an original issue discount of 99. The debt has 101 soft call protection for one year.

As previously reported, during syndication, pricing on the loan was increased from Libor plus 375 bps, the call protection was extended from six months, and the MFN sunset was removed.

Antares Capital and Golub Capital are leading the deal that is expected to close on Monday.

Proceeds will be used with about $175 million of new equity to fund the acquisition of Barrel O’ Fun Snack Foods Corp.

Shearer’s Foods is Massillon, Ohio-based private label supplier and contract manufacturer of salty snacks, cookies and crackers. Barrel O’ Fun is a Perham, Minn.-based supplier and contract manufacturer of salty snacks.

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