Syndication of pizza delivery franchise Domino's new $685 million secured credit launched last week and received strong investor reception, according to market players. An exact subscription level could not be ascertained. The deal, led by J.P. Morgan, includes a six-year, $125 million revolver and a seven-year, $560 million term loan, and is priced in the LIBOR plus 31/4% range. A $450 million note deal also backs the recapitalization plans.
Proceeds will be used to pay a $200 million dividend to the company's common equity holders, to redeem the $199.5 million of payment-in-kind preferred stock at the holding company, TISM, and to refinance the company's existing term loan and senior notes. Bain Capital controls about 49% of the company. A banker familiar with the deal noted that pricing for the credit seemed a bit aggressive, but he still thought the deal was a strong sell. The credit is expected to close with higher pricing, a stricter debt amortization schedule and a bigger excess cash flow sweep than Ann Arbor, Mich.-based Domino's existing loan. A J.P. Morgan official declined to comment and a Domino's official could not be reached by press time