Playboy Finalizes Refi, Upsizing Term Loan and Cutting Libor Floor

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Jefferies has finalized terms of Playboy Enterprises’ refinancing that revises covenant levels and lower pricing, sources said.

The term loan has been upsized by $10 million, to $185 million, with incremental proceeds available for general corporate purposes. The LIBOR floor has been flexed lower, to 1.25%, from 1.5%, while the L+600 spread and 98.5 issue price are in line with initial talk. Allocations are expected early next week.

The existing deal’s February 2017 maturity isn’t being altered.

An accompanying revolver is sized at $10 million, sources noted.

Playboy originally came to market in February 2011 to support the buyout by co-investors Rizvi Traverse and Hugh Hefner’s Icon Acquisition Holdings. Jefferies arranged that financing, which included a $185 million, six-year term loan that was issued at 98 and is priced at L+650, with a 1.75% LIBOR floor. It is non-callable in the first year, followed by 102, 101 call premiums in years two and three, respectively. The take-private offer valued the Chicago-based media company at $362 million.

The existing loan is currently callable at 101.

The new loan has been rated B with a 2 recovery rating from Standard & Poor’s. The agency earlier this year downgraded Playboy to CCC+, citing expectations that the company would violate its one-time minimum-EBITDA test for the year ended June 30, but has now placed the issuer on CreditWatch with developing implications and said it likely would raise Playboy to B- on completion of the refinancing.

Moody’s hasn’t yet weighed in the refinancing, but earlier said it expected an equity cure and continued to rate Playboy at B2. The sponsor isn’t exercising the equity cure, but the minimum-EBITDA test has been dropped from the proposed credit, sources noted. – Chris Donnelly

Source: Standard & Poor’s