Sally Beauty was active last week, even while the behemoth HCA came to the secondary, with the term loan trading in the mid-100 range. It traded between 100.531-100.719 on the day of its break, according to Markit.
Sally Beauty tapped the market in late October for a $1.47 billion credit to partially fund a special cash dividend of $25 per share for Alberto-Culver shareholders. Alberto-Culver is spinning off the Sally/BSG business. At the same time, Clayton, Dubilier & Rice made a $575 million equity investment, leading to the private equity firm owning about 47.5% of the resulting company and 52.5% owned by Alberto-Culver shareholders, according to Standard & Poor's (CIN, 10/27). As of the 12 months ending March 31, the Denton, Texas, marketer of beauty care products had generated about $2.3 billion in revenue, according to a Clayton, Dubilier & Rice press release. The transaction was completed last Thursday.
"This is the big separation we talked about for some time, to separate the consumer supply and beauty supply distribution [groups]," an Alberto-Culver spokesman said. He did not anticipate the company would be doing anymore spinoffs at this time.
Led by Merrill Lynch, Bank of America, JPMorgan and Morgan Stanley, the deal was reworked to include a $400 million asset-based revolver priced at LIBOR plus 1 1/2%, a $150 million term loan "A," priced at LIBOR plus 2 1/2% with a grid tied to net senior secured debt to EBITDA, and a $920 million term loan "B," priced at LIBOR plus 2 1/2%. Pricing on the "A" loan will step down 25 basis points when debt to EBITDA is less than 3 times. Why the changes were made could not be determined. Calls to bankers were not returned.
When it launched it consisted of a $400 ABL revolver, a $200 million "A" term loan and a $770 million term loan "B." Pricing was LIBOR plus 2 3/4% across all tranches (CIN, 10/27). Before syndication launched, S&P assigned a B corporate credit rating, a BB- to the ABL and a B+ to the "A" and "B" loans.
Calls to Gary Robinson, Sally cfo, and a Clayton, Dubilier & Rice spokesman were not returned.