Simply Good flexes $460 million incremental loan to Libor plus 375 bps

By Sara Rosenberg

New York, Oct. 31 – Simply Good Foods Co. (Atkins Nutritional Holdings Inc.) reduced pricing on its $460 million incremental first-lien term loan B (B1/B+) due July 7, 2024 to Libor plus 375 basis points from Libor plus 400 bps, according to a market source.

Also, the original issue discount on the incremental term loan was changed to 99.5 from 99, the 101 soft call protection was extended to one year from six months and the debt is now fungible with the existing first-lien term loan, the source said.

The incremental term loan still has a 1% Libor floor.

The company’s existing $195.5 million first-lien term loan will see pricing increase to Libor plus 375 bps from the current rate of Libor plus 350 bps, with the 1% Libor floor unchanged.

Lenders are being offered the existing term loan at a par issue price and will get 101 soft call protection for one year on the debt.

Another change announced was to set 50 bps MFN for life, applying to all pari passu term loans, and removing exclusions under free and clear basket and incremental equivalent debt maturity, versus prior exclusions for debt incurred under the free and clear basket and incremental equivalent debt that matures 12 months after the existing.

Furthermore, the investment basket for non-guarantor restricted subsidiaries is subject to $100 million or 66% EBITDA and the grower subject to 5x total net leverage was removed, the source continued. Previously, there were unlimited investments in non-guarantor restricted subsidiaries, and investments in unrestricted subsidiaries were subject to $10 million of 15% EBITDA.

Barclays, Goldman Sachs Bank USA, Credit Suisse Securities (USA) LLC, SunTrust Robinson Humphrey Inc., Deutsche Bank Securities Inc. and BMO Capital Markets are the bookrunners on the deal.

Commitments are due at noon ET on Friday, the source added.

Proceeds will be used to help fund the acquisition of Quest Nutrition LLC for $1 billion in cash, or about $870 million net of tax benefits, on a cash-free and debt-free basis.

Other funds for the transaction will come from cash on the balance sheet and equity.

Closing is expected by year-end, subject to customary conditions and regulatory clearance.

Simply Good is a Denver-based developer, marketer and seller of nutritional foods and snacking products. Quest Nutrition is an El Segundo, Calif.-based healthy lifestyle food company.

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