An investor group led by Dallas buyout firm Hicks, Muse, Tate & Furst Inc. is seeking about $400 million in bank loans to help finance the planned acquisition of Home Interiors & Gifts Inc. in a deal valued at roughly $1 billion.

Hicks Muse is talking to four banks and hopes to line up the financing within 30 days.

The banks were not identified, but lenders with close ties to the firm include the banking units of Chemical Banking Corp. and Bankers Trust New York Corp.

Hicks Muse also plans to raise $300 million through a public offering of junk bonds to be led by Bear, Stearns & Co.

The buyout firm is investing $77 million for a 51% stake in the company. Members of the Carter family of Dallas, descendants of Home Interiors' founder, are investing $73 million for a 49% stake.

The Carter family now owns slightly more than 50% of the company. The buyout allows the family to cash out its majority stake in a debt-free company and reinvest a small portion of the proceeds for a 49% stake in a debt-laden version.

An Eye Toward Going Public

Hicks Muse and the Carter family hope to take Home Interiors public within a few years.

The combined equity investment of $150 million accounts for a slim 15% of the total value of the buyout. Banks generally require an equity investment of 25% to 30%.

About $150 million of the $1 billion purchase price, though, will be paid out of free cash on Home Interiors' balance sheet, so the buyers are really only putting up $850 million of debt and equity.

The $150 million equity investment represents 17.6% of the $850 million, which is still thin by bank standards.

Home Interiors has annual sales of $850 million.

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