Pricing was cut on Aramark's newly increased $4.15 billion term loan and $600 million revolver, according to market sources. The term loan has settled at LIBOR plus 212.5 basis points from price talk of LIBOR plus 2 1/2% and the revolver has slid down to LIBOR plus 2% from LIBOR plus 2 1/4% (CIN, 1/5). Led by Goldman Sachs and JPMorgan, the term loan's size was increased by $490 million last week and the size of the company's proposed bond sale was reduced to $1.78 billion from $2.27 billion. A Goldman banker did not return a call and a JPM spokeswoman declined comment.
"It's purely a 'trust me' kind of credit," said one portfolio manager, citing that the company has had steady growth and steady revenues, but the credit is covenant lite. Another investor dropped out of the deal because of the price cut and increased leverage from the shift in funds. "It's a good company, but you can't make a return on that," he said.
The company announced in August it was being taken private for approximately $8.3 billion by Joseph Neubauer, ceo, and a group of investors, including GS Capital Partners, CCMP Capital Advisors, JPMorgan Partners, Thomas H. Lee Partners and Warburg Pincus (CIN, 8/11). Shareholders voted in favor of the acquisition in late December and the transaction is expected to be completed by the end of the month. After the acquisition, the company will have a debt leverage ratio of about 8.9 times. Calls to L. Frederick Sutherland, Aramark cfo, were referred to a spokeswoman who did not return a call. Spokesmen for the investor group either declined comment or did not return calls.