Bear Stearns Merchant Banking also scored a $120 million senior credit facility along with $67 million in subordinated mezzanine debt to back its acquisition of Vitamin Shoppe, with Bear Stearns and BNP Paribas providing the line. "Bear's syndication group stepped up more quickly than anyone else in a very tight frame in a competitive auction process, and BNP joined as co-lead because they knew the company," said Richard Perkal, senior managing director at the Bear Stearns buyout arm, adding that BNP has lent to the vitamin industry before.
There were some pricing concessions on the five-and-a-half year line, Perkal admitted. The facility reportedly closed with the "B" piece priced at LIBOR plus 43/ 4% and the revolver at LIBOR plus 41/ 4%. The "B" loan was also reported to have sold at a 23/ 4% original issue discount. The facility is secured pari passu with the mezzanine piece, Perkal stated. He said the credit came in within the contemplated ranges and the revolver was upsized to $20 million from $15 million. "The term [loan] was always set up to be between $100-110 million," he added, regarding the $100 million "B" tranche, which was oversubscribed at closing.
"It was good pricing for a deal in this present retail market," he stated, speaking to the final terms. The six-and-a-half-year, mezzanine piece was led by Blackstone Mezzanine Partners and J.P. Morgan. Both credits hit the market in late October and closed at the end of last month, with about eight investors signing into the deal, Perkal said. Bear Stearns was attracted to the North Bergen, N.J.-based vitamin, mineral and nutritional supplement retailer because of its compelling retail platform, he explained, adding that the firm plans to broaden the stores to a nationwide presence beyond its current east coast concentration.