The deal backing Texas Pacific Group's and Warburg Pincus' $5.1 billion buyout of The Neiman Marcus Group hit the market with a bang last week. Investors have been anticipating the deal since May, and just a day after Tuesday's launch, lead banks Credit Suisse First Boston and Deutsche Bank were rumored to have $2 billion in commitments in the books for the $1 billion term loan. "It's a blowout," one banker said.
The $1.6 billion package comprises a seven-and-a-half, $1 billion term loan and a five-year, $600 million asset-based revolver. Pricing is LIBOR plus 1 3/4% on the revolver and LIBOR plus 3% on the term loan. The deal is also expected to include $1 billion of senior secured notes, a $750 million of senior unsecured cash/PIK tranche and $575 million senior subordinated notes.
The bank meeting consisted of a public call in the morning, a tour of Bergdorf Goodman in New York and then a call for private investors in the afternoon.
"[Texas Pacific] traditionally has a history of buying either companies with screwed up management or operations; they just buy screwed up things and fix them," one investor said. "Neiman is not fixed up but has a great part of the demographic cycle and it will only grow as the baby boomer segment receives a huge transfer of wealth and continues to grow."
In March, Neiman Marcus said it was exploring strategic alternatives to enhance shareholder value, including the possibility of selling the company. "We believe that our new partners will help us continue to focus on a business plan that is dedicated to luxury leadership, financial discipline, quality and growth," she had said by email. "We expect to continue conducting business as usual" (LMW, 5/6). Calls to spokeswomen were not returned. Bankers at CSFB and Deutsche declined comment.