The credit facilities backing a dividend recapitalization for Oriental Trading Co. , a portfolio company of Brentwood Associates , have been well oversubscribed, leading to a $30 million increase in the proposed dividend from $100 million. The BNP Paribas -led first-lien loan is five times oversubscribed, and the tranche was increased from $25 million to $30 million, said a banker. The term loan is priced at LIBOR plus 2 3 Ž 4 %.
The $75 million second-lien loan, led by Credit Suisse First Boston , was increased to $80 million after being three times oversubscribed. This new debt is being shopped at LIBOR plus 6%, a 50 basis points cut from initial price talk. The company is also using an additional $20 million in cash to fund the increased dividend. The company already has a seven-year, $250 million "B" loan (LMW, 7/13).
While the banker said the response was overwhelmingly positive, one buysider said he does not think the dividend should be so high on a company like Oriental Trading. Investors may not like the use of proceeds for dividends, but they sign up for it, the banker responded. After the transaction, debt-to-EBITDA is expected to increase from 3.1 times to 4.5 times. Calls to Rodger Jensen , Oriental Trading's cfo, and Anthony Choe , a principal at Brentwood, were not returned.