Phillips-Van Heusen has outlined its plans to secure the financing for its £2bn deal to acquire Tommy Hilfiger.
Calvin Klein-owner Phillips-Van Heusen’s (PVH) proposed debt financing for the deal includes a $450m (£297m) five-year revolving credit facility, a $500m (£330m) five-year term loan and a $1.5bn (£1bn) term loan, according to WWD.
In addition to taking on the debt, PVH said it will issue stock to private equity backers Apax, and use $385m (£254m) of its current cash flow and issue $200m (£132m) in common stock to fund the acqusition.
“It’s a very robust cash flow story,” said Emanuel Chirico, PVH’s chairman and chief executive officer, at the Barclays Capital High Yield Bond and Syndicated Loan Conference last week. “It allows us to pay down debt quickly, get the earnings benefit associated with that and be able — in a relatively short period of time, between two-and-a-half and three years — to get our pro forma debt-to-EBITDA ratio back below 2.5 times.”
Meanwhile, Tommy Hilfiger will end its agreement with Chinese licensee Dickson Concepts on March 1, 2011 and will directly control its Chinese wholesale and retail business, which currently comprises 103 points of sale.
Dickson Concepts will remain the licensee for the Tommy Hilfiger in Hong Kong, Macau, Taiwan, Singapore and Malaysia until 2019.