TNS Inc. (TNS:US), a maker of networking products, set the rate it will pay on $640 million of covenant- lite loans backing its buyout by Siris Capital Group, according to a person with knowledge of the transaction.
A $540 million first-lien term portion will pay interest at 4.25 percentage points more than the London interbank offered rate, said the person, who asked not to be identified because the information is private. Libor, a rate banks say they can borrow in dollars from each other, will have a 1.25 percent floor.
TNS is proposing to sell the loan at 99 cents on the dollar, the person said, reducing proceeds for the company and boosting the yield to investors.
A $100 million second-lien term piece will pay 8.25 percentage points more than Libor, with a 1.25 percent floor and is expected to be sold at 98 cents, according to the person.
SunTrust Banks Inc. (STI:US) and Macquarie Group Ltd. are arranging the financing and hosted a bank meeting this morning in New York, the person said. The debt is rated B1 by Moody’s Investors Service and BB- by Standard & Poor’s.
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