NEW YORK, May 9 (Reuters) - Harbor Freight has revised the terms on its dividend recap loan, sources told been Thomson Reuters LPC. The issuer has downsized its $1 billion senior secured term loan to $750 million. It also has shortened the tenor on the facility to 5.5 years from seven years.
The rate on the loan has bumped up to 425bp over Libor with a 1.25 percent Libor floor and a discount of 99 cents on the dollar. At launch, the loan was guided at 400bp over Libor with a 1.25 percent Libor floor a discount of 99 cents on the dollar.
The loan will have 101 soft call protection for one year and continues to be covenant-lite. As a result of the changes, pro forma total leverage has declined to three times from 3.7 times at launch. Recommitments are due at 5 p.m. today.
As previously reported, the term loan is led by Credit Suisse. The company is also raising an asset-based revolving line of credit via Wells Fargo. Proceeds are to refinance existing debt and pay a dividend.
In December 2010, Harbor Freight, which is a discount tool store, raised a $650 million term loan B at 500bp over Libor with a 1.5 percent Libor floor. That loan was sold to institutional investors at 99 cents on the dollar and came with call protection of 102 and 101 in the first and second years, respectively.