(Bloomberg) — Dave & Buster’s Entertainment Inc., the chain that features sports bars and arcade games, launched a junk bond sale Monday that would give the company more liquidity and provide relief from Covid-19 pressures.
The company is looking to borrow $500 million through the five-year secured note offering. Proceeds will repay a term loan and revolving credit facility, and be used for general corporate purposes.
As part of the transaction, the company is suspending certain maintenance covenants through April 2022, adding a $150 million minimum liquidity covenant and extending the maturity of its revolving credit facility by two years to 2024, according to a news release. Upon closing, the company will have about $299 million in available liquidity.
The chain has faced breaching the terms of its $500 million revolving credit facility after pandemic shutdowns sent its revenue plunging. A waiver from lenders was set to expire Nov. 1, and the company has previously warned that it may need to file Chapter 11 to restructure its obligations. Dave & Buster’s has been showing improving sales in October.
Early pricing discussions for the bond offering are in the mid-to-high 8% range, according to people familiar with the matter who asked not to be identified discussing a private transaction.
The notes will be secured by the same subsidiaries that guarantee its term loan and revolving credit facility. An investor call is scheduled for 11 a.m. in New York and the deal, one of at least seven new high-yield bond offerings announced Monday, is expected to price later today. JPMorgan Chase & Co. is leading the sale.