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RLPC-Pret A Manger Completes 375 Mln STG Debt Refinancing

Private equity firm Bridgepoint’s coffee and sandwich chain Pret A Manger has raised a new 375 million pound ($568.5 million) loan to refinance existing debt and pay a 150 million pound dividend to shareholders, sources told Thomson Reuters Loan Pricing Corp.

(Reuters) – Private equity firm Bridgepoint’s coffee and sandwich chain Pret A Manger has raised a new 375 million pound ($568.5 million) loan to refinance existing debt and pay a 150 million pound dividend to shareholders, sources with knowledge of the deal said on Friday.

Bridgepoint bought Pret in 2008 in a deal backed by 220 million pounds of debt, according to Thomson Reuters LPC data. It decided in June to get value out of the company by conducting a dividend recapitalisation – a refinancing process that increases a company’s debt to allow a payout.

Out of the 375 million pounds of new loans raised, 150 million pounds will be paid via a dividend to shareholders including Bridgepoint, management and Pret’s founders, two of the sources said.

Bridgepoint recently carried out a 300 million euro dividend recapitalisation for its sports marketing company Infront Sports & Media that refinanced the company’s debt and paid around 160 million euros as a dividend.

European loan investors have traditionally frowned on dividend recapitalisations, and they tend only to be used in bull markets.

However, they re-emerged as a lack of M&A activity this year prompted sponsors to look at alternative ways to get value out of assets and have become more acceptable to investors keen to keep liquidity invested.

Bank of Ireland, BNP Paribas, HSBC, ING, Rabobank, Royal Bank of Scotland and Societe Generale underwrote the new 375 million pound refinancing which includes a 40 million pound term loan A, paying 450 bps over Libor; a 265 million pound term loan B, paying 500 bps over Libor; a 30 million pound revolving credit facility, paying 450 bps over Libor; and a 40 million pound capital expenditure facility, paying 450 bps over Libor, three of the sources said.

The term loan B was sold to investors at a 2 percent discount and allocated on Europe’s secondary loan market on Thursday. It was quoted on Friday morning at 98-98.5 percent of face value, four of the sources said.

By raising a new loan, leverage on the company increased to 4.17 times its EBITDA from a level of below 2 times in 2012. When Bridgepoint acquired the business, Pret’s leverage was over 5 times, banks said in a statement in June when the deal was first announced.

Headquartered in London, Pret sells fresh, ready-to-eat food and drinks through over 300 stores in the UK, France, Hong Kong and the United States. It has opened 110 new shops since 2008.

Pret posted sales in 2012 of 443 million pounds and EBITDA of 61.1 million pounds compared with EBITDA of 30 million pounds in 2008.