(Bloomberg) -- J. Crew, the preppy clothing retailer notorious for kicking off a wave of controversial financial maneuvers, priced a $450 million leveraged loan Tuesday to refinance debt after lowering borrowing costs during the marketing process.
It’s the firm’s first such deal in several years, and signals some forgiveness on investors’ part. In credit circles, J. Crew is perhaps best known for shuffling assets out of reach from creditors in a 2016 transaction that sparked the current wave of “creditor-on-creditor violence.”
The company’s new loan priced at six percentage points above the Secured Overnight Financing Rate and was issued at a discounted price of 98.25 cents on the dollar, according to a person familiar with the matter who asked not to be identified because the information is private. Pricing was slightly tightened Tuesday, a sign of strong investor demand.
Still, just four US leveraged loans this year have had a bigger margin than J. Crew’s, according to data compiled by Bloomberg.
The deal also includes a “blocker” that restricts J. Crew from transferring certain assets to unrestricted subsidiaries to secure new financing, according to Moody’s Ratings. Goldman Sachs Group Inc. led the transaction.
Debt refinancings and loan repricings have made up nearly 90% of this year’s US leveraged-loan activity as borrowers have taken advantage of cheaper funding rates and increased investor demand for the debt. Average prices in the secondary market remain near their highest since 2022.
Debt Financing Turns Cutthroat in War Over Fine Print: QuickTake
J. Crew filed for Chapter 11 bankruptcy in May 2020, the first major retailer to do so in the wake of the pandemic. It emerged four months later with new ownership and less debt.
©2024 Bloomberg L.P.
