(Updates with bond price guidance in sixth paragraph)
Sept. 20 (Bloomberg) -- Avis Budget Group Inc., the car rental company buying Avis Europe Plc, cut the interest rate on the $420 million term loan backing the acquisition, according to a person with knowledge of the transaction.
The seven year B loan will pay 5 percentage points more than the London interbank offered rate, compared with the spread of 5.25 percentage points initially offered, said the person, who declined to be identified because the terms are private. Libor, the rate banks charge to lend to each other, will have a 1.25 percent floor, after earlier being considered at 1.5 percent.
The debt is being sold at 98 cents on the dollar, the person said, reducing proceeds for the company and boosting the yield for investors.
The Parsippany, New Jersey-based company is also seeking a $300 million revolving line of credit and a $200 million term loan A, according to data compiled by Bloomberg.
Morgan Stanley, Citigroup Inc., Credit Agricole SA, Royal Bank of Scotland Group Plc and Scotia Capital are arranging the financing, said the person. Investors have until today to submit commitments to the banks.
Avis is also selling $250 million of senior notes due March 2020, the person said. The notes, which may yield about 9.75 percent, will sold as soon as tomorrow, said the person.
John Barrows, an Avis spokesman, didn’t respond to an e- mail seeking comment.
A term loan A is sold primarily to banks, while so-called B loans are mainly bought by non-bank lenders such as collateralized loan obligations, mutual funds and hedge funds.
--With assistance from Tim Catts in New York. Editors: Faris Khan, Chapin Wright
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