Wendy’s Co. (WEN:US), the U.S. hamburger chain, set the rate it will pay on a $1.12 billion loan to refinance debt, according to a person with knowledge of the matter.
A $300 million term A portion due in 2018 and an $815 million B piece maturing in May 2019 will pay interest at 2.5 percentage points more than the London interbank offered rate, with a 1 percent floor on the lending benchmark, said the person, who asked not to be identified because the deal is private.
Wendy’s may sell the six-year debt at 99.875 cents to 100 cents on the dollar, the person said.
Bank of America Corp. and Wells Fargo & Co. are arranging the transaction and lenders are asked to let the banks know by April 10 at 5 p.m. in New York whether they will participate in the deal, the person said.
The Dublin, Ohio-based company obtained a $1.125 billion loan and $200 million revolving line of credit last year to refinance debt, according to data compiled by Bloomberg. The term piece pays interest at 3.5 percentage points more than Libor with a 1.25 percent minimum on the lending benchmark.
The company’s existing loan fell to 100.4 cents on the dollar today from 100.9 cents yesterday, according to prices compiled by Bloomberg.
Moody’s Investors Service assigned a B1 rating to Wendy’s A debt and rates the company B2 with a “positive” outlook. Standard & Poor’s grades the credit BB- and the company B+ with a “stable” view.
Bob Bertini, a spokesman for Wendy’s, didn’t immediately return a telephone call seeking comment.
A term loan B is sold mainly to non-bank lenders such as collateralized loan obligations, bank loan mutual funds and hedge funds. A term loan A is sold mainly to banks. In a revolving line of credit, money can be borrowed again once it’s repaid; in a term loan it can’t.
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