GTM Holdings is in the market with a $380 million credit facility, launched at a very well attended bank meeting, according to an investor. The deal is led by Bear Stearns and consists of a six-year, $50 million revolver; a seven-year, $225 million first-lien term loan and a seven-and-a-half-year, $105 million second-lien term loan. Pricing is LIBOR plus 3% on the first lien and LIBOR plus 6 1/2% on the second.
The credit is being used to back the acquisition of sock manufacturers Gold Toe and Moretz by The Blackstone Group, announced in August. After the transaction, the combined companies will form GTM Holdings.
Enticing investors with free pairs of men's and women's dress and athletic socks at the bank meeting may not be enough to push the credit along. "The problem with this and the Renfro deal is you have huge exposure to the big box retailers," said an investor. "Wal-Mart and Kmart are doing their own private label brands nothing is stopping them from going around these people. That's a massive risk."
Renfro, also a sock manufacturer, turned to Bear Stearns for a $205 million credit facility in mid-September. That deal consists of a $145 million senior secured term loan "B" and a $60 million asset-based revolver. Pricing is LIBOR plus 3 1/4%, according to an investor. The deal hit the secondary market Oct. 3 with a sweetened 99 1/2 OID and 101 soft call protection that was added on Sept. 29, according to an investor. It is currently trading around 99 5/8, he said.
Standard & Poor's rated GTM's first lien B with a 2 recovery rating and the second lien CCC+ with a recovery rating of 5. Moody's Investors Service rated the first lien B1 and the second Caa1.
Based in Whitsett, N.C., GTM is a designer, manufacturer and marketer of men's, women's and children's socks, selling primarily to mass merchants, and department and national chain stores. Brands of the combined companies will include Gold Toe, Silver Toe, PowerSox, New Balance and Under Armour. Calls to a GTM spokesman and a Blackstone spokesman were not returned.