Bank of America, JPMorgan and Deutsche Bank are leading an $825 million credit to fund the $1.5 billion leveraged buyout of School Specialty by Bain Capital Partners and Thomas H. Lee Partners. The deal comprises a $175 million revolver, a $300 million term loan "B" and a $350 million delayed-draw term loan. Pricing could not be determined. Syndication of the deal is scheduled to launch Thursday. The acquisition is expected to close at the end of September or the beginning of October.
School Specialty is an education company providing learning materials for the pre-kindergarten- Grade 12 market. Bain announced its intention to acquire the company in June (LMW, 6/6). Thomas H. Lee joined the acquiring group Aug. 19. At the close of the transaction, Bain will have a 60% stake in the company and Thomas H. Lee will have a 40% stake.
Mary Kabacinski, School Specialty's executive v.p. and cfo, said that although it will have more debt on its books after this transaction, the facilities have been negotiated to continue an acquisition path of about $100 million per year. "We actually expect that we will continue the strategy as it has been established," she said. "We have been consolidating the industry with targeted acquisitions since '98 and we expect that to continue."
Separate from the LBO, School Specialty recently acquired Delta Education from Wicks Learning Group, an affiliate of The Wicks Group of Companies, a New York-based private equity firm for $272 million. In its Bank of America-led loans from 2003, it had the option for a $100 million carve out, which it will use to finance this transaction. Kabacinski said the company had entered into a competitive bidding process and it was "seller's timing" that the transaction is taking place now.
Nashua, N.H.-based, Delta publishes hands-on-science curriculum developed by the University of California, Berkley, for the elementary school market. As part of the transaction, School Specialty has also acquired Delta's Educators Publishing Service division, which publishes titles for grades K-8. To complete the transaction, School Specialty entered into an amendment under its merger agreement, allowing for the Delta acquisition.
Craig Klosk, managing partner of The Wicks Group of Companies, and representatives from Thomas H. Lee and Delta, did not return calls.