RLPC-Hanesbrands DBApparel buy backed with $500 mln loan

LONDON, July 15 Tue Jul 15, 2014 11:43am EDT

LONDON, July 15 (Reuters) - US listed underwear maker Hanesbrands' acquisition of French peer DBApparel is being financed with a $500 million leveraged loan, banking sources said on Tuesday.

Hanesbrands agreed to buy DBApparel last month for 400 million euros ($545.62 million) from private equity firm Sun Capital Partners, in an acquisition that brings together the Wonderbra and Playtex brands.

JP Morgan, Barclays and HSBC are leading the deal, which consists of a $500 million, euro-denominated term loan B paying an interest margin of 275 basis points (bps) over Euribor with a 75bp Euribor floor, which guarantees minimum returns to investors.

The loan is expected to be offered with a 99.5 original issue discount, the banking sources said.

Lenders have been asked to make commitments to the BBB-/BAA3 rated loan by July 25.

Hanesbrands' existing $1.1 billion revolving credit facility will remain in place, the banking source said.

The financing is covenant loose with leveraged and interest cover covenants only, as opposed to the four covenants that are typically used on buyout loans which also include fixed charge and free cashflow covenants.

Covenant-loose loans, however, offer more protections than covenant-lite loans, which have no maintenance covenants.

"The loan is an interesting one for the loan market because pricing is tight but from a rating and credit quality point of view, and the fact it has covenants, the deal is attractive," a banker said.

Hanesbrands is based in Winston-Salem North Carolina and employs 51,500 people in more than 25 countries, according to the company's website. ($1 = 0.7331 Euros) (Editing by Tessa Walsh)