Cheaper rate could save the retailer around $4.4m in interest over the lifetime of the loan.
As reported by Bloomberg, Toys R Us is close to getting a cheaper rate on an operating loan that could help with the retail chain’s efforts to reorganise in bankruptcy, according to a person with knowledge of the matter.
While the company has a total of $3.1b in bankruptcy financing, including a $1.85b asset-backed revolver, the improved rate comes on a $450m term loan. Initial talk for the loan, which is syndicated and fully funded, was a price of Libor plus 750 basis points, or 7.5% points; now a rate of Libor plus 675 basis points is being discussed, according to the person, who asked not to be identified because the discussions are private.
The terms will potentially save the company around $4.4m in interest over the lifetime of the loan, according to data compiled by Bloomberg. The terms also improved on the original-issue discount, giving Toys R Us 99.5% of the loan’s funds, rather than 99%.
JPMorgan Chase & Co. is the lead agent on the 16-month loan, and Citigroup, Deutsche Bank, Goldman Sachs Group and Barclays are joint arrangers and book runners, according to court papers.
Though Toys R Us has temporary permission to draw on the “debtor-in-possession,” or DIP, financing, a court hearing to seek approval of its final terms is scheduled for 10th October The Wayne, N.J.-based company has said it wants to pay $96.5 million to agents, arrangers and lenders for the financing.
In the UK, Toys R Us is continuing to open new stores, with the latest location being announced as Sunderland. The retailer has moved into the former home of Pep & Co in city centre shopping mall The Bridges, and is expected to open it doors to customers in the week commencing Monday 2nd October.