$4.25 Billion Credit Facility for Fred Meyer Inc.

Strategic Insights -

Fred Meyer Inc. has secured commitments for a $4.25 billion credit facility from top investment banks, led by BT Alex. Brown, Chase Manhattan, NationsBank, and Salomon Smith Barney. The facility will provide Fred Meyer with a $2 billion revolver, a $1.75 billion A-term loan, and a $500 million synthetic lease line. The deal is expected to be priced in the first week of March, with a junk bond issuance planned for the same month.

Key Takeaways:

  • The credit facility has received commitments from approximately $2.5 billion in top-tier banks, including First Chicago NBD, Donaldson Lufkin & Jenrette, Goldman Sachs, Morgan Stanley, Societe Generale, and others.
  • The deal is structured as a $2 billion revolver, a $1.75 billion A-term loan, and a $500 million synthetic lease line.
  • Pricing is expected to open at Libor plus 100 basis points, with tiered pricing based on leverage ranging from Libor plus 62.5 basis points to Libor plus 125 basis points.
  • Top underwriters include BT and Chase, with 30% and 30% of the deal, respectively, and co-documentation agents Nations and Salomon with 20% each.
  • Wells Fargo has committed $250 million, while 20 other lenders have committed amounts ranging from $125 million to $25 million.

Statistics:

  • $4.25 billion: Total credit facility size
  • $2.5 billion: Amount of commitments already secured
  • $2 billion: Size of the revolver
  • $1.75 billion: Size of the A-term loan
  • $500 million: Size of the synthetic lease line
  • Libor plus 100 basis points: Initial pricing
  • Libor plus 62.5 basis points to Liberty plus 125 basis points: Tiered pricing for leverage
  • March: Expected pricing date for the deal
  • $1.5 billion: Size of the junk bond issuance

Sources:

  • No external sources provided in the original text.