Shareholders set for 65 mln stg payout on Fat Face loan refi

LONDON, United Kingdom - British outdoor clothing chain Fat Face is looking to pay around 65 million pounds (106.20 million US dollar) as a dividend to shareholders as part of a wider 210 million pound loan refinancing, banking sources said on Monday.

Citigroup and Goldman Sachs are leading the financing and a bank meeting took place last week to show investors the deal, which includes a 180 million pound term loan. There is also a 30 million pound revolving credit facility, which Lloyds Bank provided an anchor commitment to.

European private equity firm Bridgepoint acquired Fat Face in 2007 for 360 million pounds backed with 210 million pounds of leveraged loans that were amended and extended in 2012. It pulled a planned 110 million pound listing in London in May due to poor equity market conditions, according to Thomson Reuters LPC.

It has now decided to conduct a dividend recapitalisation, a process whereby debt is refinanced and increased in order to facilitate a dividend payment. The company will also use some cash on balance sheet as part of the financing, the banking sources said.

One of the sources said the refinancing will return more to investors than an IPO would.

Around 120 million pounds of the term loan will be used to refinance existing debt, including a more expensive junior tranche.

The six-year term loan B is guided to pay between 500 basis points (bp) to 525bp over Libor at 99.5 original issue discount and the five-year revolver is guided to pay 425bp over Libor, the bankers said.

Investors have been asked to commit to the deal by October 1.

Bridgepoint declined to comment.

Since 2011 Fat Face has performed well with Ebitda growing from 24.8 million pounds to 39.3 million pounds, deleveraging strongly to around 2.5 times net total debt (around 1.7 times net senior debt) as at year end May.

1 US dollar = 0.6121 British pound