(Bloomberg) -- A group of banks led by Deutsche Bank AG is looking to offload a $700 million term loan to pay for the acquisition of protein bar brand FitCrunch after they were stuck holding the debt earlier this month, according to a person with knowledge of the matter.
The banks were unable to sell a larger loan to institutional loan investors before 1440 Foods closed its purchase of FitCrunch on Nov. 1, and a portion of the debt was left on their balance sheets, Bloomberg reported at the time. The revived loan sale, about $175 million less than the prior deal, launched Friday at a steep discount, said the person, who asked not to be identified discussing a private transaction.
The banks — including Jefferies Financial Group Inc., a unit of Macquarie Group Ltd. and BNP Paribas SA — are offering the leveraged loan at 5 percentage points over the Secured Overnight Financing Rate and a discounted price of 94 cents to 95 cents on the dollar. That’s down from a range of 96 cents to 97 cents in late October, which was part of a sweetened offer to attract demand.
Representatives for Macquarie and 1440 Foods declined to comment, while those for Deutsche Bank, BNP and Jefferies didn’t immediately respond to requests for comment.
The new offering also has added lender safeguards, such as a J. Crew blocker as well as Chewy and Serta protections, some of which help prevent assets being moved out of the reach of creditors, the person said. Lender commitments on the seven-year loan are due Nov. 25, almost a month later than when the original offering was expected to be sold.
The loan’s struggle comes during a record year for the leveraged loan market, with pricings topping more than $1 trillion for the first time, and more than $50 billion of new offerings launched this week alone — the fourth busiest week going back as far as 2013 when Bloomberg first started compiling data.
1440 Foods, backed by private equity firms Bain Capital and 4x4 Capital, acquired FitCrunch operator Protein Bar Holding for about $700 million, according to S&P Global Ratings. Bain last December agreed to buy a stake in 1440 Foods — which owns FitCrunch competitors including Pure Protein, Met-Rx and Balance.
Representatives for Bain and 4x4 Capital declined to comment.
The acquisition was to be funded with a $875 million term loan, a $200 million asset-based lending facility and $120 million in equity from Bain and 4x4, according to S&P. It estimated FitCrunch’s debt would be 7.9 times Ebitda after the takeover, a “very high” metric.
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