(Bloomberg) -- A group of banks led by Wells Fargo & Co. are offering a mid-single digit yield on a $1.6 billion first lien term loan to support Tempur Sealy International Inc.’s acquisition of Mattress Firm Group Inc., according to a person familiar with the matter.
Initial pricing discussions on the seven-year covenant-lite loan call for a margin of 2.25 to 2.5 percentage points over the Secured Overnight Financing Rate Rate, offered at a discounted price of 99.5 cents on the dollar, the person said, asking not to be identified because the information is private. The transaction is rated Ba1 by Moody’s Ratings, the person added, the highest non-investment grade rating.
Commitments on the loan are due Thursday, Oct. 3 at 5 p.m. New York time, the person said. A lender call was scheduled for 2 p.m. Monday.
A representative for Tempur Sealy declined to comment. Representatives for Wells Fargo and Mattress Firm did not respond to a request for comment.
The Federal Trade Commission moved in July to block the acquisition, which is valued at $4 billion. The antitrust regulator stated concerns of Tempur Sealy having the ability to raise prices and suppress competition. Other companies have sold debt while acquisitions are contested, with Kroger Co. selling $10.5 billion in notes last month to fund its acquisition of Albertsons Cos.
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