Dollar General Corp., the discount retailer acquired by KKR & Co. in 2007, is planning to raise $3.15 billion in bonds and loans to help refinance senior secured borrowings.
The company may sell $900 million of 10-year notes to yield 155 basis points more than similar-maturity Treasuries and $400 million of five-year securities at a relative yield of 120 basis points as soon as today, according to a person with knowledge of the transaction who asked not to be identified because the terms are private. The debt may be rated Baa3, the lowest level of investment grade, by Moody’s Investors Service.
The bank debt is expected to consist of a $1 billion term loan and an $850 million cash flow-based revolving credit line, each due in five years, Dollar General said today in a statement distributed by Business Wire.
Dollar General, based in Goodlettsville, Tennessee, plans to use proceeds from the term loan and the note sale to pay off a senior secured credit pact and for general corporate purposes, according to the statement.
Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc., JPMorgan Chase & Co., U.S. Bancorp and Wells Fargo & Co. are arranging the note offering, Dollar General said in the statement.
Dollar General last sold debt in June, issuing $500 million of 4.125 percent, five-year debentures to yield 340.6 basis points more than benchmarks, according to data compiled by Bloomberg. The bonds traded at 107.5 cents on the dollar to yield 2.28 percent on March 26, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. A basis point is 0.01 percentage point.
Dollar General had $2.77 billion of total debt as of Feb. 1, including $1.96 billion of loans, $500 million of notes and a $1.2 billion asset-based revolver with $873.4 million available for borrowing, according to a March 25 regulatory filing.
Under a revolver, money can be borrowed again once it’s repaid; in a term loan, it can’t.
© Copyright 2014 Bloomberg News. All rights reserved.