Carter's $625 million credit facility expected to launch next week

By Sara Rosenberg

New York, June 1 - Carter's Inc. is expected to hold a bank meeting next week to launch its proposed $625 million credit facility, according to a market source.

Banc of America Securities LLC and Credit Suisse First Boston are the lead banks on the deal.

The facility consists of a $500 million seven-year term loan and a $125 million six-year revolving credit facility, with interest rates on the tranches expected to be anywhere from Libor plus 175 basis points to Libor plus 200 basis points depending on credit ratings.

Proceeds from the credit facility will be used to fund the acquisition of OshKosh B'Gosh Inc. and refinance existing Carter's debt. OshKosh has no debt outstanding.

Currently, Carter's has about $50 million outstanding under its existing senior credit facility that will be refinanced through this new deal.

Under the acquisition agreement, Carter's will pay $26.00 per share in cash for each share of OshKosh common stock outstanding for total consideration of about $312 million.

The acquisition, which is subject to regulatory review and other terms and conditions, is expected to close in the third quarter.

At closing, leverage will be a little over 3x trailing 12 months EBITDA, interest coverage will be over 4x and the debt to capitalization ratio will be around 55%.

Carter's is an Atlanta-based marketer of children's apparel for ages newborn to six years old. OshKosh is an Oshkosh, Wis.-based marketer of children's apparel and accessories.

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