Nov 5, 2014
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Fat Face's dividend loan faces further changes

Nov 5, 2014

LONDON, United Kingdom - A 210 million pounds loan financing a dividend recapitalisation and refinancing for British outdoor clothing chain Fat Face could be adjusted to reduce leverage, banking sources said on Tuesday.

The deal, which launched in September with a 180 million pound term loan B, has already been adjusted twice in October, bringing losses to arranging banks Citigroup and Goldman Sachs.

Further changes could see the term loan reduced to 140 million pounds and a new 40 million pound second lien tranche included, which would reduce senior leverage and make the deal more attractive to investors, sources said.

Bridgepoint declined to comment.

The deal is still in syndication with pricing of 550bp with a discount of 94 percent of face value, they added.

A second lien loan is likely to have a margin of 550bp with a bigger discount of around 82 if it is added to the deal, one source said.

“At these levels, Fat Face becomes far more interesting,” a banker said.

The term loan was originally expected to pay 500-525bp over Libor with a discount of 99.5.

European private equity firm Bridgepoint bought Fat Face in 2007 for 360 million pounds, backed with 210 million pounds of leveraged loans that were amended and extended in 2012.

Bridgepoint withdrew a planned 110 million pound listing in London in May this year due to poor equity market conditions, according to Thomson Reuters LPC.

Around 120 million pounds of the term loan will be used to refinance existing debt, including a more expensive junior tranche and around 65 million pounds will fund a dividend payment to shareholders.

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