Authentic Brands Taps Loan Market to Slash Costs, Fund Buyout

Authentic Brands Group is seeking to slash the interest costs on a $3.3 billion loan and borrow an additional $400 million to fund an acquisition, marking the latest company to capitalize on a receptive market for risky debt.

Arrangers led by Bank of America are attempting to lower the interest rate margin on the company’s existing loan due in 2028 to 300 basis points over the Secured Overnight Financing Rate, according to a person with knowledge of the matter. The adjustment would save Authentic Brands more than $65 million over the life of the loan, according to Bloomberg calculations.

The additional $400 million of debt will support Authentic’s purchase of Champion Athleticwear from HanesBrands, said the person, who is not authorized to speak publicly. That portion of the deal may be sold at a slight discount to par, the person said.

The new debt is a welcome sight for loan investors, who have been slogging through a record volume of repricings this year. More than 80% of last month’s $163 billion of leveraged loan pricings were repricings of prior deals, according to data compiled by Bloomberg. That means investors have mostly been forced to accept lower yields on their holdings and have had few opportunities to invest new money.

Bank of America declined to comment and Authentic Brands didn’t immediately respond to a request for comment on the deal. 

Authentic Brands, led by Chief Executive Officer Jamie Salter, is one of the most acquisitive companies in the consumer and retail sector. The Champion purchase would add to the company’s stable of dozens of well-known brands, including Reebok, Brooks Brothers and Vince Camuto. Its portfolio also includes the rights to Sports Illustrated as well as boxing legend Muhammad Ali and European football great David Beckham.

This article was generated from an automated news agency feed without modifications to text.

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Published: 07 Jun 2024, 12:00 AM IST

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