UBS Warburg held a bank meeting for the $175 million for Hollywood Entertainment loan last week in New York. The deal, consisting of a $25 million revolver, and a $150 million term loan, has spreads of LIBOR plus 3 1/2 % and LIBOR plus 4%, respectively, and the tenor on both tranches is roughly four years. A banker commented the amortization schedule is good, with 40% in the first two years and with 0.9 x senior leverage, the deal is structured fairly conservatively. Response is said to have been positive, with a number of accounts attending the bank meeting and closing is expected in Mid-February, concurrent with the raising of $100 million of equity.
The credit refinances a $255 million Société Générale-led facility expiring in March. The company ran into trouble when it attempted to expand aggressively, but has improved considerably since. A bond rally has been cited as evidence of the improvements in the business and investor confidence, according to a banker. The bonds have jumped from 60 to par and the company reported strong same store sales growth of 11%, he added, above the projected figures. A UBS banker declined comment and Jim Marcum, cfo of Hollywood, could not be reached by press time.