Commentary & Deal Flow

Beach Acquisition Bidco LLC (Skechers) (SKX) approx US$3.316bn equivalent (from US$4.25bn equivalent) (US$/EUR) 144A/Reg S 2-part. No reg rights. SMR at 100 if the acquisition is not completed by 02/28/26. Settles 07/14.

- EUR1bn (down from US$1.75bn equivalent (US$500m minimum and EUR500m minimum)) sr sec 1st lien notes due 2032 (7y). NC3. (MWC B+50bp) (50%,25%,par). Equity claw: 3y 40%. Special call: 10% per year the 1st 3 years at 103. Ba3/BB-/BB- (positive/stable/stable). Via JPM (B&D)/Barc/MUFG/BNP/MS/GS/UBS/TD/Scotia/Santaner/Citi/RBC/ING/HSBC/WFS/TSI/BMO/DB/CIBC/USB/Huntington/FITB jt books. CoC at 101. Denoms: 100x1. IPT: 6% area. Price talk: 5.75% area. Final price talk 5.25%-5.50%. Final terms: EUR1bn at 5.25%.

- $2.2bn (down from $2.5bn) sr PIK toggle notes due 2033 (8y). NC3 (104, 101, par). Equity claw: 3y 40%. Caa1/B+/B- (positive/stable/stable). via JPM sole. List ISE. CoC at 101. Denoms: 200x1. PIK pay at issuer's election on all, 75%,50%,25% or 0% of the interest for any interest period, except the final period which must be in cash. IPT: 10% cash +75bp if PIK. Price talk: 10% cash +75bp if PIK. Final price talk: 10% cash +75bp if PIK. Final terms: $2.2bn at 10% cash / 10.75% PIK.

Dropped: US$500m minimum due 2032 (7y). NC3. (MWC T+50bp) (50%,25%,par). Equity claw: 3y 40%. Special call: 10% per year the 1st 3 years at 103. CoC at 101. Denoms: 200x1. IPT: 7% area. Price talk: 6.50%-6.75%.

The sr sec notes were originally US$1.75bn equivalent 2-part, consisting of US$500m minimum and EUR500m minimum. The $634m sr sec notes downsize and $300m sr notes downsize was switched to the sr sec term loan, resulting in a $300m increase in the total sr sec debt, but with the overall total transaction size unchanged. JCrew provision added to the high yield notes. Did investor call at 10am NYT / 3pm UKT 06/23. Books closed 5pm UKT / 5pm NYT 06/25. Reconfirms were due 11am UKT 06/26. Pricing 06/26, concurrently with the term loan. UOP: along with US$3.005bn (EUR1.25bn and US$1.55bn), from US2.115bn equivalen ($1.245bn and EUR750m (US$870m equivalent) sr sec term loan Bs (also $1.6bn revolver, undrawn) via JPM +(lender call 10am 06/17, commitments due 5pm NYT/5pm UKT 06/25), to fund the LBO of Skechers USA Inc by 3G Capital for $63.00 per share in cash (or a mixed election consideration of $57.00 and one non-listed equity unit of the parent company of Sketchers' LLC units) or an equity value of $9.4bn (total transaction value of $10.37bn). 3G and rolling shareholders will contribute $4.4bn in equity. Closing of the acquisition is expected in Q3 2025. Biz: global designer and marketer of contemporary casual, active, rugged. sports, and lifestyle footwear. HQ: Manhattan Beach, CA. (Acquisition announced 05/05/2025).

Deal Roadshow direct link: https://dealroadshow.com/e/MARTENHYB2025. Entry code: MARTENHYB2025.