William Carter to use some proceeds from parent's IPO to repay bank debt, notes

New York, Aug. 23 - Carter Holdings, Inc. will contribute part of the proceeds from its planned initial public offering of common stock to its William Carter Co. subsidiary to repay bank debt and outstanding junk bonds.

Carter Holdings said in a filing with the Securities and Exchange Commission that it is required by the terms of the credit facility to use half the proceeds from the IPO to reduce borrowings. The company also said it would pass part of the proceeds to its subsidiary to repay some of its 10.875% senior subordinated notes due 2011. The redemption price will be 110.875% of par.

Carter did not specify how much it expects to raise from the IPO nor did it say how much it will spend on repaying bank debt and redeeming notes. However the filing with the SEC registered $100 million of common stock. Carter will also pay $3.7 million to Berkshire Partners LLC to terminate its management agreement. Remaining proceeds will be used for general corporate purposes.

At June 29 William Carter had $297.9 million of debt outstanding made up of $173.8 million of notes and $124.1 million in borrowings on its term loan due 2008. Nothing was drawn on the $60 million revolver although there were $10.4 million letters of credit outstanding. Interest on the term loan is at Libor plus 350 basis points.

William Carter issued $175 million of the notes and took out the $125 million term loan in August 2001 when it was acquired by Berkshire Partners LLC.

Carter, an Atlanta, Ga. marketer of apparel for babies and young children, named Goldman Sachs & Co. as lead manager for the IPO.

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