Bloomberg News

HD Supply Sets Rate on $1 Billion Loan to Refinance Debt

March 27, 2012

HD Supply Inc., the industrial distribution company partly owned by Carlyle Group LP, Bain Capital LLC and Clayton, Dubilier & Rice LLC, set the interest rate it will pay on a $1 billion term loan it’s seeking to refinance debt, according to a person with knowledge of the transaction.

The debt, due in 5.5 years, will pay interest at 5.5 percentage points more than the London interbank offered rate, said the person, who declined to be identified because the terms are private. Libor, the rate banks say they can borrow in dollars from each other, will have a 1.25 percent floor.

HD Supply is proposing to sell the loan at 97.5 cents on the dollar, the person said, reducing proceeds for the company and boosting the yield to investors.

Bank of America Corp., Goldman Sachs Group Inc., Barclays Plc, Credit Suisse Group AG, Deutsche Bank AG, JPMorgan Chase & Co., Wells Fargo & Co. and UBS AG are arranging the term loan, according to data compiled by Bloomberg.

The Atlanta-based company is also seeking to refinance its existing asset-based credit line with a new $1.5 billion asset- based revolving line of credit, the data show. GE Capital Markets, the lending unit of General Electric Co., is arranging that piece.

In addition to the refinancing, the company is marketing a private offering of first-lien notes due 2019 and second-lien notes that mature in 2020, it said yesterday in a statement.

12 Percent Notes

Proceeds from the new covenant-lite term loan B, along with drawings under the new $1.5 billion asset-based revolving line of credit and the new debt, will be used to refinance the company’s 12 percent senior notes due in 2014, said the person. HD Supply issued $2.5 billion of the notes in 2009, according to Bloomberg data show.

Quiana Pinckney, a spokeswoman for HD Supply, declined to comment.

Carlyle, Bain and Clayton, Dubilier & Rice acquired HD Supply for $8.5 billion in August 2007, according to data compiled by Bloomberg.

In a revolving credit facility, money can be borrowed a once it’s repaid; in a term loan it can’t. An asset-based financing is secured by the borrower’s inventory and account receivables.

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

To contact the editor responsible for this story: Chapin Wright at cwright4@bloomberg.net


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