Rent-A-Redo

After refinancing $600 million of debt in July, Rent-A-Center is back in the market for another refinancing.

  • 06 Oct 2006
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After refinancing $600 million of debt in July, Rent-A-Center is back in the market for another refinancing. RAC is now looking for a $1.3225 billion facility to refinance its newest $725 million credit from JPMorgan and help fund the acquisition of Rent-Way.

The company had originally set out for a $600 million add-on to the existing $725 million credit facility, but is now looking for a complete revamp from incumbent sole-lead, JPMorgan. Launched last Tuesday, the deal consists of a five-year, $400 million revolver; a five-year, $197.5 million "A" term loan and a six-year, $725 million term loan "B," according to market sources. Calls to spokesmen at Rent-A-Center and Rent-Way were not returned.

The July refinanced facility consists of a $400 million revolver, a $200 million "A" term loan and a $125 million term loan "B." Pricing on the pro rata is LIBOR plus 1% and pricing on the term loan "B" is LIBOR plus 1 1/2%. Pricing on the new facility could not be determined, although one investor expected it to be increased from the existing facility.

Plano, Texas-based Rent-A-Center announced in August it would acquire Rent-Way for $10.65 in cash per share, for a total transaction value of approximately $567 million. Moody's Investors Service downgraded Rent-A-Center's corporate family rating to Ba3 and $600 million of 7.5% existing senior subordinated notes due 2010 to B2. The downgrades were a result of the debt-financed acquisition. Rent-A-Center is a leasing center for consumer goods with an option for ownership at the end of the rental period. Rent-Way, headquartered in Erie, Pa., is also a rental-purchase store operator.

  • 06 Oct 2006

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