Rodan + Fields has reached an agreement with an ad hoc group of lenders on a liability management transaction that features new money and a non-pro-rata uptiering debt exchange, according to sources.
The deal marks the latest attempt by an issuer and its private equity sponsor to preserve optionality and allow for more time for the business to improve and grow into the capital structure. Similar transactions in
Serta Simmons,
Boardriders,
Trimark,
Incora and
Mitel, dubbed creditor-on-creditor violence, have drawn ire and opposition from lenders that were left out of the deal. But the companies argue that the transactions are allowed under the terms of the companies’ credit agreements.
An ad hoc group of lenders to the multilevel marketing cosmetics company, holding about 65% of the tranche, will uptier a portion of their loans into a second-out tranche, while providing $30 million of new money in the form of loans of the same second priority, the sources said. These lenders will also exchange the rest of their holdings into a new third-out tranche at a 17.5% discount, they said. Rodan + Fields has launched a debt exchange for non-ad hoc group lenders to swap their holdings for third-out loans but at a steeper discount, the sources added.
The existing term loan was quoted at 35/40 today, according to a trading desk.
The new capital structure also includes a $50 million first-out revolver, the sources said.
Rodan + Fields is advised by Ropes & Gray as legal advisor and Jefferies Group as financial advisor, as reported. An ad hoc group of lenders is
represented by Milbank.
Rodan + Fields and sponsor TPG did not immediately respond to requests for comment.
--Harvard Zhang