Payless ShoeSource Inc. (0008740D:US), a footwear retailer, is seeking a $175 million add-on term loan to fund a dividend to shareholders, according to a person with knowledge of the transaction.
Morgan Stanley, Jefferies Group Inc. and MerchCap Solutions LLC, a joint venture between Stone Point Capital LLC, KKR & Co. and Canada Pension Plan Investment Board, are arranging the transaction, said the person, who asked not to be identified because the information is private. The banks will host a lender call Feb. 14 at 11:30 a.m. in New York to discuss the deal.
Leverage, or debt to earnings before interest, taxes, depreciation and amortization, will be 2.5 times, the person said.
The company’s term loan maturing in 2019, pays interest at 6 percentage points more than the London interbank offered rate with a 1.25 percent floor, according to data compiled by Bloomberg. The debt was sold to investors at 98.5 cents on the dollar and was quoted at 101.75 cents today, according to prices compiled by Bloomberg.
Sacheen Cicero, a spokeswoman for the Topeka, Kansas-based Payless ShoeSource, didn’t immediately respond to an e-mail seeking comment.
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