Crocs sets Jan. 11 lender call to launch $2B term loan

A Citi-led arranger group has scheduled a lender call for 12:30 p.m. ET on Jan. 11 to launch a $2 billion term loan B for Crocs Inc., according to sources. Additional details of the financing are not yet available.

Crocs announced on Dec. 23 that it was acquiring casual footwear company HEYDUDE for $2.5 billion with committed financing provided by Citi in the form of a $2 billion term loan. Under the terms of the agreement, total consideration is to be funded with $2.05 billion in cash and $450 million in shares of Crocs. In addition to the TLB, the cash portion of the funding will be provided by a $50 million draw on the company's revolver. Pro forma net leverage is expected to be around 3x, based on estimated 2021 EBITDA. Closing of the acquisition is expected in the first quarter of 2022.

The financing commitment also includes a $500 million backstop revolving credit facility as the company seeks an amendment to the existing revolver to permit the acquisition and allow the additional debt.

For reference, existing debt at Crocs includes a $350 million issue of 4.125% senior unsecured notes due August 2031 that was issued in August and $350 million of 4.25% senior unsecured notes due March 2029 that were placed in March.

Moody's has affirmed the corporate rating of Crocs at Ba3, with a stable outlook, assigned a Ba2 rating to the term loan, and downgraded the senior unsecured rating B2, from B1. S&P Global Ratings has not yet assigned a rating to the loan, but in December placed all ratings of Crocs, including current corporate and senior unsecured ratings of BB-, on negative CreditWatch.

Nasdaq-listed Crocs makes casual footwear for women, men and children.