Dollar General nets $12.25 billion loan facility for Family Dollar hostile bid

By Jonathan Schwarzberg

NEW YORK (TRLPC) - Dollar General (DG.N) has lined up $12.25 billion (7.61 billion pounds) of loan commitments from Goldman Sachs and Citigroup to back its now hostile $9.1 billion bid for rival Family Dollar (FDO.N), according to a regulatory filing.

Dollar General said Wednesday it would take its bid directly to Family Dollar shareholders after being spurned by the target on Friday in favour of an $8.5 billion offer from smaller rival Dollar Tree (DLTR.O).

The senior secured commitments, split evenly between Goldman Sachs and Citigroup, include a $6.5 billion, seven-year term loan and a $2.5 billion, five-year asset-based revolver.

The company said it also has commitments for a $3.25 billion senior unsecured, one-year bridge loan if it does not sell $3.25 billion of unsecured notes before the closing date.

Interest on the term loan is expected to open at LIB+300. The interest rate on the revolver would be based on available capacity and would range from LIB+125-175.

If the bridge loan is put in place, interest is expected to open at LIB+500 and increase by 50bp every three months. The term loan has six months of soft call protection at 101.

Dollar General's cash tender offer is for $80 per share and is set to expire October 8. Family Dollar's stock opened at $78.80 per share on Wednesday and was trading around $78.55 during the morning session.

Dollar General previously made a bid of $78.50 per share for Family Dollar and increased its offer to the current price after Family Dollar turned down that proposal.

Dollar General is offering to pay a $500 million termination fee if the deal is pulled over regulatory issues. The company said it is willing to sell up to 1,500 stores to make sure the acquisition is approved.

(Editing By Jon Methven)