Bloomberg News

99 Cents Only Stores Said to Remove Covenants From Buyout Loan

December 14, 2011

Dec. 13 (Bloomberg) -- 99 Cents Only Stores, the discount retailer being purchased by Ares Management LLC and Canada Pension Plan Investment Board removed financial covenants from a $525 million term loan B that finances the buyout, according to a person with knowledge of the transaction.

The seven-year debt will pay 5.5 percentage points more than the London interbank offered rate with a 1.5 percent minimum on the benchmark, according to data compiled by Bloomberg.

The company is proposing to sell the debt at 98 cents on the dollar, Bloomberg data show, reducing proceeds for the borrower and increasing yield for investors.

Royal Bank of Canada and Bank of Montreal are arranging the financing for The City of Commerce, California-based company which is also seeking a $150 million asset-based revolving line of credit and $250 million of senior notes, Bloomberg data show.

99 Cents Only agreed to be acquired for about $1.6 billion, the company said in an Oct. 11 statement. Members of the founding Gold/Schiffer family support the $22-a-share offer and will continue to hold a minority stake in the company, according to the statement.

Angela Thurstan, a spokeswoman for 99 Cents Only, didn’t respond to an e-mail seeking comment.

An asset-based financing is secured by the borrower’s inventory and account receivables. A term loan B is sold mainly to non-bank lenders such as collateralized loan obligations, mutual funds and hedge funds.

--Editors: Faris Khan, Pierre Paulden

To contact the reporter on this story: Michael Amato in New York at mamato3@bloomberg.net

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net


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