United Biscuits, owner of McVitie’s and Jacob’s snacks brands, began raising 725 million pounds ($1.1 billion) of senior loans to replace its debt facilities after selling its KP Snacks unit earlier this year.
The financing includes a 75 million-pound five-year credit line and 650 million pounds of seven-year term loans in pounds and euros, according to three people with knowledge of the matter, who asked not to be identified because the transaction is private. Banks and institutional investors have been asked to commit funds to the deal and a lender meeting is due to take place on July 1.
Andrew Dowler, a spokesman in London for Blackstone who works for RLM Finsbury, and Rosanna Konarzewski, a London-based spokeswoman for PAI Partners, declined to comment on the deal.
The company, controlled by private-equity companies Blackstone Group LP (BX:US) and PAI Partners, completed the sale of its KP Snacks unit earlier this year. The division sold for about 400 million pounds, people said at the time.
The company’s debt comprised about 800 million pounds of senior loans, 160 million pounds of second-lien debt and 220 million pounds of mezzanine before the KP Snacks sale, according to a company report. Existing lenders can transfer their commitments to the new financing, the people said.
United Biscuits, based in Hayes, England, is offering to pay interest of 500 basis points, or 5 percentage points, more than the London interbank offered rate for the term loan in pounds, and 425 basis points for the portion in euros. It proposes to pay 400 basis points more than Libor for the revolving credit, said the people.
United Biscuits’s ratio of net debt to earnings before interest, taxes, depreciation and amortization will be 3.5 times after the refinancing, the people said. Standard & Poor’s assigned a B+ rating to the company and its senior secured bank facilities, it said in a report today.
Goldman Sachs Group Inc. and JPMorgan Chase & Co. are arranging the debt, the people said.
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