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DB Upsizes Pierre Foods’ TL, Cuts Discount


By Richard Kellerhals

March 1, 2010

Deutsche Bank has upsized a $260 million term loan for Pierre Foods to $275 million and has narrowed the OID to 99.5 from 99, according to Bloomberg. The coupon remains at Libor plus 500 bps, with a 2% Libor floor.

Amortization on the loan is at 5% during the first two years, 10% during the subsequent three years and 60% during the sixth and final year. It also includes a full covenant package. Credit Suisse is on the right side of the deal.

Pierre Foods, a Cincinnati-based frozen foods maker, plans to use the proceeds to refinance its $160 million exit loan and to make a $100 million dividend payment to its private equity owners.

The new loan will provide the company with a lower interest rate, as the exit loan was syndicated to investors last year at Libor plus 600 bps, with an OID of 97 and a 2% Libor floor. However, the new loan will also increase Pierre’s leverage ratio to 3.5x from 2.8x, according to Standard & Poor’s, which rates the company B.

Pierre, a portfolio company of Chicago private equity firm Madison Dearborn, filed for bankruptcy protection in July of 2008 after failing to make an interest payment.


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