Burger King allocates, trades higher; Toys ‘R’ Us sets Monday meeting for $1.38 billion loans

By Paul A. Harris

Portland, Ore., Sept. 25 – In a generally quiet bank loan market, with numerous participants sidelined by the observance of Rosh Hashanah, the LCDX 22 index of bank loan credit default swaps traded lower by ¼ point to finish at 103¼ bid, 103¾ offered

High-grade bank loans were softer with equities, a trader said.

High-yield loans were holding in.

The Zebra Technologies Corp. $2 billion seven-year term loan B, now in the market, is doing well, the trader said.

The deal has price talk of Libor plus 350 basis points to 375 bps with a 0.75% Libor floor and an original issue discount of 99. Commitments are due Monday.

Burger King Worldwide Inc. priced its $6.75 billion Libor plus 350 bps covenant-light term loan B at 99.

Toys ‘R’ Us Inc. set a bank meeting on Monday for a $1,375,000,000 credit facility.

Burger King trades higher

Burger King Worldwide priced its $6.75 billion Libor plus 350 bps covenant-light term loan B at 99, a bank loan trader said.

The deal allocated and then traded to 99¾ bid, par 1/8 offered, the source added.

The spread came on top of spread talk. The reoffer price came at the rich end of the 99 to 99.5 price talk.

The loan has 101 soft call protection for six months.

J.P. Morgan Securities LLC and Wells Fargo Securities LLC are the lead banks on the debt.

The facility also has a $500 million revolver.

Proceeds will be used to help fund the acquisition of Tim Hortons, Inc. for C$65.50 in cash and 0.8025 common shares of the new company per Tim Hortons share. As an alternative to the default mixed transaction consideration described above, each Tim Hortons shareholder will have the ability to elect to instead receive, for each Tim Hortons share held, either C$88.50 in cash or 3.0879 common shares of the new company, in each case subject to pro ration.

Other funds for the transaction will come from $2.25 billion of senior secured second-lien notes and a commitment from Berkshire Hathaway for $3 billion of preferred equity financing. Berkshire will not have any participation in the management or operation of the business.

The new company will have about 5 times leverage through the bank and bond debt at close, but the company expects that substantial free cash flow generation will allow for steady deleveraging.

Upon completion of the transaction, each outstanding common share of Burger King will be converted into 0.99 of a share of the parent company and 0.01 of a unit of a newly formed Ontario limited partnership controlled by the new parent company; however, shareholders of Burger King common stock will be given the right to elect to receive only partnership units in lieu of common shares of the new parent company, subject to a limit on the maximum number of partnership units that can be issued.

3G Capital will retain all of its investment in Burger King by converting its roughly 70% equity stake in Burger King into equity of the new company. On a pro forma basis, 3G Capital is expected to own about 51% of the new company with the balance of the common shares to be held by current public shareholders of Burger King and Tim Hortons.

The combined company will be based in Canada.

Closing is expected late this year or early next year, subject to approval of Tim Hortons shareholders and receipt of certain antitrust and regulatory approvals in Canada and the United States.

Burger King is a Miami-based fast food hamburger chain. Tim Hortons is an Oakville, Ont.-based restaurant chain.

Mister Car prices at 99.25

Mister Car Wash priced its $180 million Libor plus 400 bps seven-year covenant-light term loan B at 99.25 on Thursday, according to a market source.

The price came on top of price talk that was revised from 99 while the deal was in the market. The spread came on top of spread talk that had been revised from 450 bps.

The 101 soft call protection was extended to one year from six months.

The loan still has a 1% Libor floor.

The company’s $210 million credit facility (Ba3/B-) also includes a $30 million revolver.

Jefferies Finance LLC, Nomura Securities Co., Ltd. and BMO Capital Markets Corp. are the leads on the deal.

Proceeds will be used to back the recently completed buyout of the company by Leonard Green & Partners LP from Oncap.

Other funds for the transaction are coming from $87.5 million of privately placed unsecured notes and about $270 million of equity.

Leverage through the bank debt is around 3.9 times.

Mister Car Wash is a Tucson, Ariz.-based car wash company.

Toys sets bank meeting

Toys ‘R’ Us set a bank meeting on Monday for a $1,375,000,000 credit facility, according to bank loan trader.

Goldman Sachs & Co. is leading the deal.

It includes a $1,025,000,000 5.5-year term loan B-4 and a $350 million five-year first-in-last-out loan.

Pricing and credit ratings remain to be determined.

Proceeds from the new term loan will be used to refinance $646 million of secured term loans due fiscal 2016, a significant portion of the $583 million of incremental secured term loans due 2018 and $350 million of 7 3/8% senior secured notes due 2016.

Toys ‘R’ Us is a Wayne, N.J.-based toy retailer.

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