Maidenform Brands is tacking an extra $62.2 million onto its $87.8 million first-lien term loan. The intimate-apparel company is altering the debt structure as it pursues an Initial Public Offering. The move will also lower Maidenform's cost of capital, explained a lender. BNP Paribas leads the bank lines, which were put in place in April 2004 to back Ares Management's acquisition of Maidenform from Oaktree Capital Management. An Ares spokesman declined comment as the company is in a quiet period.
The new loan will redeem a higher-priced $50 million second-lien tranche and pay fees and expenses. The company is also increasing its revolver by $20 million to $50 million. The first-lien loan is currently priced at LIBOR plus 2 3/4% and the second-lien debt is priced at LIBOR plus 7 1/2%, with 102 call protection. The new debt will be priced at LIBOR plus 2 1/4%. The debt modifications are not dependent on the success of the stock offering, which will redeem preferred PIK shares.
One lender explained that the tone of the market has improved since Ares completed the acquisition, but also the company has improved its performance. Maidenform has seen sales grow over 10% per year since 2001 as the company has expanded its distribution through mass merchandisers. Moody's Investors Service rates the senior secured debt Ba3. Following the transaction, Moody's expects pro forma leverage, adjusted debt to EBITDAR, to be around 4 times. UBS, Goldman Sachs and Credit Suisse First Boston are leading the IPO.