NEW YORK, Oct 21 (IFR) - Bank of America Merrill, Goldman
Sachs and JP Morgan have approached investors to sell a US$250
million bridge loan that part-financed the buyout of teen
clothing retailer Rue21 by Apax Partners, market sources said on
Two market sources not directly involved in the deal said
the underwriters were trying to gauge where the clearing level
would be for the loan, a bridge to a high-yield bond, after the
banks suffered a US$100 million loss on the term loan.
The underwriters were forced to price the US$538.5 million
term loan at a steep discount at 81.5 earlier this month.
Although the loans have since risen to around 85, the bonds
would have to offer some discount to that to account for the
subordination of the issue, one of the sources said.
One investor, who decided not to buy the bridge, said
investors were pushing for a discount in the mid-70s area in
terms of pricing, which would equate to a yield of around
14-15%. The coupon on the senior unsecured notes, maturing in
2021 and rated Caa3 by Moody's, is expected to be 9%, the
It is not clear whether the bridge loan has been completely
sold, all of the sources said.
Bank of America Merrill Lynch, JP Morgan and Goldman Sachs
were either not immediately available, or declined to comment.
Moody's estimates pro forma debt/EBITDA at around 8.0 times
for the twelve months ended August 3 2013.
"Given the discretionary nature of Rue 21's product, recent
fashion missteps and pressures facing the company's lower-income
target customer, leverage is likely to further increase and
remain elevated over the near-to-intermediate term," the rating