26 Feb, 2021

Petco Health and Wellness wraps $1.7B refinancing TLB; terms

Petco Health and Wellness Co. Inc. has wrapped a $1.7 billion, seven-year covenant-lite first-lien term loan B (L+325, 0.75% Libor floor), which priced with an original issue discount, or OID, of 99.75, sources said. Citi was left lead on the transaction, which cleared tight of talk. Proceeds from the TLB, along with a new $500 million asset-based revolving credit facility, will be used to refinance the issuer's existing capital structure. The company's existing first-lien term loan due January 2023, issued at PETCO Animal Supplies Inc., is priced at L+325, with a 1% floor and a leverage-based step-down. San Diego-based Petco is a retailer of premium pet food, supplies and services. Terms:

Borrower Petco Health and Wellness Co. Inc.
Issue $1.7 billion first-lien term loan
UoP Refinancing
Spread L+325
Libor floor 0.75%
Price 99.75
Tenor 7 years
YTM 4.11%
Four-year yield 4.13%
Call protection 101 soft call for 6 months
Corporate ratings B/B2
Facility ratings B/B2
Recovery ratings 3
Financial covenants None
Arrangers Citi/GS/WF/BofA/CS/UBS
Admin agent Citi
Px Talk L+325-350/0.75%/99.5
Sponsor Public
Notes

Upsized by $500 million.

Mandatory Prepayments: Including but not limited to: (i) 50% of excess cash flow proceeds (subject to leverage based step downs based on First Lien Net Leverage) (ii) 100% of net cash proceeds from non ordinary course asset sales (subject to leveraged based step downs and customary reinvestment rights) and (iii) 100% of debt issue proceeds (other than debt permitted).