Smart Foodservice lifts term loan B to $425 million, updates pricing

By Sara Rosenberg

New York, June 6 – Smart Foodservice (Sage Borrowco LLC) upsized its seven-year covenant-lite term loan B to $425 million from $405 million and set pricing at Libor plus 475 basis points, the low end of the Libor plus 475 bps to 500 bps talk, according to a market source.

Also, the MFN was revised to 50 bps for life from 75 bps for six months, and MFN carve-outs were removed for inside maturity basket, MFN exception amount basket, syndicated floating-rate term loans, term loans that are incurred to finance an acquisition/investment, term loans that mature at least two years after the maturity date of the existing term loan and facilities initially established under the dollar or debt prepayment prongs, the source said.

Mandatory prepayments were changed to remove asset sale step-downs, which were previously proposed as 50% and 0% at 0.5x and 1x inside closing net first-lien leverage.

Restricted payments were modified to unlimited subject to pro forma net leverage of 1x inside closing date leverage from 0.75x inside closing date leverage.

Investments were revised to unlimited investments subject to pro forma net leverage of 0.75x inside closing date leverage from 0.5x inside closing date leverage, investments in similar businesses subject to the greater of $18 million and 23% of LTM EBITDA from the greater of $24 million and 30% of LTM EBITDA, and investments in joint ventures subject to the greater of $18 million and 23% of LTM EBITDA from the greater of $24 million and 30% of LTM EBITDA, the source continued.

Furthermore, a quarterly lender call requirement was added to the credit agreement.

The term loan still has a 0% Libor floor, an original issue discount of 99 and 101 soft call protection for six months.

The company’s now $475 million of senior secured credit facilities, up from $455 million, also include a $50 million revolver.

Deutsche Bank Securities Inc., BMO Capital Markets Corp., RBC Capital Markets, Bank of America Merrill Lynch, Barclays, Credit Suisse Securities (USA) LLC and UBS Investment Bank are the bookrunners on the debt.

Recommitments were scheduled to be due at 1 p.m. ET on Thursday, the source added.

Proceeds will be used to help fund the buyout of Smart & Final Stores Inc. by Apollo Global Management LLC.

Closing is expected by the third quarter, subject to more than 50% of the company’s shares being tendered, regulatory approvals and other customary conditions.

Smart Foodservice is a Portland, Ore.-based retailer of bulk foodservice offerings almost exclusively catering to small restaurant businesses and commercial customers.

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