Playboy increases takeover loan to $185 million

Playboy Enterprises Inc., publisher of the namesake men's magazine, increased the size of the term loan it's seeking to fund its takeover by founder Hugh M. Hefner to $185 million, and set final pricing terms, according to a person who has been briefed on the deal.

Price guidance on the six-year term loan, which had originally been $160 million, is 6.5 percentage points more than the London interbank offered rate, with a 1.75 percent minimum on the lending benchmark, said the person who declined to be identified because the terms are private. The loan is expected to price at 98 cents on the dollar.

Jefferies Group Inc. is arranging the loans for the Chicago-based company, according to the person. Commitments from lenders are due at 4 p.m. today New York time.

Playboy won't be able to call the loans in the first year and will then have to pay a 2-cent premium to refinance the loans in the second year, a 1-cent premium in the third year and can refinance the loans at par in the fourth year, the person said.

A $20 million five-year revolving line of credit was reduced to $10 million, according to data compiled by Bloomberg.

Price guidance on the loans was initially indicated at 6.5 percentage points over Libor, with a 1.75 percent Libor floor, according to a commitment letter filed with the Securities and Exchange Commission Jan. 24. Guidance was then adjusted to a range of 6.5 percentage points to 7 percentage points over Libor.