JPMorgan Chase & Co. is set to lead about $6.5 billion in debt financing to support private equity firm 3G Capital’s purchase of footwear maker Skechers, according to a person with knowledge of the matter.
The debt sale is expected to launch after the Memorial Day holiday, which occurs on May 26, said the person, who was not authorized to discuss the transaction publicly. 3G Capital expects its $9.4 billion Skechers buyout, which also includes an equity component, to close during the third quarter, according to a company statement.
Within the planned financing is $4 billion of secured debt and $2.5 billion of unsecured debt, the latter of which would allow for a “payment-in-kind” feature with a toggle option, said the person. That means the borrower can choose whether to pay interest in cash or by issuing more debt.
A JPMorgan representative declined to comment. Representatives for 3G Capital and Skechers did not immediately respond to requests for comment.
Shares of the trendy sneaker brand soared Monday morning on news that 3G Capital plans to buy the company for $63 dollars a share — a 30% premium to its 15-day volume-weighted average stock price.
Founded in the early 1990s and based in Manhattan Beach, California, Skechers is now the third-largest global sports footwear retailer. It has nearly doubled revenue over the past five years, and is on the path to reach $10 billion in sales by 2026, according to Abigail Gilmartin, Bloomberg Intelligence’s retail analyst.
Though Skechers sources about 40% of its goods from China, Gilmartin expects that its global footprint might help mitigate tariff pressures, including through price concessions and reallocating merchandise.
The deal’s announcement comes as leveraged finance markets are beginning to reopen after a sharp slowdown that followed the Trump administration’s initial tariff announcement on April 2, which sparked retaliation internationally.
Since then, the debt financing for at least three leveraged buyouts became “hung,” meaning banks were unable to sell bonds and loans to investors and got stuck with the debt themselves.
Although debt backing QXO Inc.’s purchase of Beacon Roofing Supply was well-received by investors in late-April, it was one of just a handful of deals banks successfully launched since the global trade war erupted. JPMorgan’s effort to sell debt for the Skechers buyout could serve as a litmus test for investor appetite, potentially paving the way for underwriters to revive sales of roughly $5.7 billion in hung debt from last month.
. Read more on Business by NDTV Profit.Within the planned financing is $4 billion of secured debt and $2.5 billion of unsecured debt, the latter of which would allow for a “payment-in-kind” feature with a toggle option. Read MoreBusiness, Markets, Bloomberg
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