Private-equity firms TA Associates and Friedman, Fleischer & Lowe have tapped GE Capital for a $170 million credit facility to back their $350 million acquisition of Tempur World, a maker of foam mattresses and pillows. The purchase occurs against the backdrop of a busy leveraged buyout scene, as well as a tough high-yield financing market, according to Andy McLane, a senior managing director at TA Associates. "Most of our larger buyouts are structured with equity, sub debt and senior debt," McLane said. "But [the high-yield] market is not open right now," he added, explaining why the bank loan market primarily was tapped to fund the acquisition.
The credit is split between a U.S. facility and a European facility as the Lexington, Ky., company has operations in Scandinavia. The U.S. portion consists of a $65 million term loan and a $30 million revolver, while the European component consists of a $20 million revolver and $55 million term loan. At closing, $150 million of the bank facility will be funded, creating a leverage multiple of just under three times senior debt and less than four times total debt, McLane said. He declined to disclose the spreads.
GE Capital was selected to lead the financing after a competitive bidding process, McLane noted. The flexibility of being able to syndicate inside and outside of the U.S., combined with the overall structure and terms, clinched the lead spot, he said.Nordea Bank syndicated the European facility.
The acquisition also was funded with $50 million in subordinated notes, with TA Associates purchasing $35 million of the notes and Gleacher & Co. buying the remainder. The sponsors negotiated the sub debt piece, McLane said, noting that TA Associates has a $500 million subordinated debt fund from which to bankroll acquisitions. In addition to the debt financing, TA Associates and Friedman Fleischer are putting $95 million and $50 million of equity, respectively, into the deal.