Kohlberg Kravis Roberts & Co.'s planned purchase of a controlling interest in TW Holdings Inc. has provided an opening for KKR lenders to join TW's existing bank group on an expanded credit.
TW, based in Spartanburg, S.C., has about $900 million of bank debt stemming from a 1989 buyout by Coniston Partners.
The buyout financing was led by Citibank, Bank of Nova Scotia, and Long-Term Credit Bank of Japan. Other major participants in the original buyout credit include NationsBank in Charlotte, N.C.
47% Stake in Restaurant Company
Following last week's announcement that KKR was acquiring a 47% stake in TW as part of a major recapitalization of the restaurant operator, some of KKR's regular banks expressed interest in participating in a new TW credit.
KKR lenders include Bankers Trust Co., Chase Manhattan Bank, and Citibank.
In a statement last Thursday, TW said Citibank committed to provide $300 million of new loans as part of the recapitalization, which also includes a $300 million equity investment by KKR and the sale by TW of $200 million of senior unsecured notes.
Existing Lenders Get First Crack
While members of TW's existing bank group will get first crack at participating in the new credit, KKR banks also will be accommodated.
Despite the cash -- and gloss -- that KKR brings to TW, the prospect of joining the TW credit left some bankers cold.
"If we get a call, we'll look at it, but I don't want to raise my hand," said the KKR relationship manager at one bank, who take a dim view of restaurant deals.
Taking Care of Junk Bonds
Proceeds from the new bank credit could be used by TW to help fund the call or repurchase of buyout-related junk bonds, depending on the success of a proposed exchange offer, also announced last week.
It's unclear whether the new bank credit would be necessary if the exchange offer is successful.
Also unclear is whether the new $300 million credit would be tacked on to the existing credit -- which would require amendments to the original covenants -- or whether the old and new loans would be blended together in a new refinancing package.