White Cap Planning Loan, Junk Bond Sale

White Cap Industries Inc., which sells tools to building contractors in the western U.S., is preparing to raise $220 million from a loan and junk bond sale, according to people familiar with the company’s plans. The Costa Mesa company is to sell $120 million worth of junk notes, most likely with a 10-year maturity. Donaldson, Lufkin & Jenrette Securities is arranging the sale. Lenders are expected to meet this week to consider the $100-million senior secured loan, bankers said. The loan, which is structured as a five-year revolving credit, is priced at 250 basis points over the London Interbank Offered Rate, or LIBOR. It also carries a 50-basis-point commitment fee on the unused portion. White Cap said in July that it would be acquired by its management and a group led by Leonard Green & Partners, a Los Angeles private merchant banker, for $240 million. A shareholder vote on the plan is scheduled for Jan. 21. Proceeds from the bank loan will be used for day-to-day spending and future acquisitions. White Cap shares were unchanged at $15 on Nasdaq.