J. Crew has come to market with a $285 million term loan that was originally delayed in the fall when the company decided to hold off on its initial public offering. Unlike its fall effort, this facility is not contingent on an IPO. It is priced at LIBOR plus 2 1/2%. Goldman Sachs and Bear Stearns are leading the financing and Wachovia Securities is also involved. According to a filing with the Securities and Exchange Commission, commitment letters include an accordion feature in which the loan could be increased to $385 million. The financing also consists of a $170 million asset-based revolver, which will be amended to allow for a bifurcated collateral structure.
Although the loans are not contingent upon an IPO, it is expected the company will try to get it done this year, when it deems market conditions to be right, though a timetable has not been set, market players said. Texas Pacific Group is the company's sponsor.
The banks first brought the financing in October as a seven-year, $295 million term loan with expected pricing in the range of LIBOR plus 2 1/4%-2 1/2%. The deal was set to close the week it was pulled after the company decided to delay its IPO until this year (CIN, 11/7).
According to Moody's Investors Service, the new loan along with excess cash will retire the $22 million 13.125% senior discount debentures due 2008 and to repay the unrated $275 million 9.75% senior subordinated notes. Moody's assigned a B2 rating to the loan. It also upgraded J. Crew's corporate family rating to B2 due to a solid performance that has led to an improvement in credit metrics. Calls to Jim Scully, cfo, were not returned. A spokesman for TPG declined comment.