Not all that much. Clayton, Dubilier & Rice, along with Leonard Green & Partners, are injecting $335 million equity into the buy of the formal wear retailer, according to Moody’s Investors Service.
Of the $335 million, 75%, or $251 million, is coming from CD&R, while Green is providing 25%, or $84 million, Moody’s said. In August, CD&R said it was buying David’s Bridal from Leonard Green and TPG in a deal valued at $1.05 billion. The $335 million equity contribution comes to about 32% of the deal value.
The 32% is “about normal,” one PE exec says. In the past year, equity contributions have ranged from 30% to 35%, the source says.
This is still a dramatic change from 2009 when equity contributions were nearing 50%. Credit is much more ample, the PE exec says, so equity checks have fallen.
Conshohocken, Pa.-based David’s Bridal sells wedding and bridesmaid dresses through more than 300 stores in the U.S. and several in Canada. The company’s focus has been on selling wedding dresses for less than $800. David’s Bridal produced about $740 million revenue for the 12 months ended June 30, Moody’s said.
David Bridal’s debt leverage will increase “considerably” with the $1.05 billion buyout, Moody’s analyst Mariko Semetko said. Initially, the company’s pro forma debt/EBITDA will be high at well above 7x. “Given the company’s history of consistent cash generation, we believe credit metrics will gradually improve over time,” Semetko said.
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