A Goldman Sachs-led arranger group has set price talk on the $525 million first-lien term loan for Del Monte Foods Inc. following a lender call this morning, according to sources. Commitments will be due Feb. 16.

The seven-year term loan will be offered at a spread of 425-450 basis points over the secured overnight financing rate plus a credit spread adjustment, with a 0.50% floor and an original issue discount of 99. The credit spread adjustment will be 10 bps for a one-month rate, 15 bps for a three-month rate and 25 bps for a six-month rate. There is also a ticking fee that kicks in at 50% of the margin from days 31-60, stepping to 100% of the margin thereafter. Lenders will be offered six months of 101 soft call protection.

At talk, the yield to maturity is approximately 5.02%-5.28%.

Proceeds will be used to refinance the company's existing capital structure. The issuer has a $500 million tranche of 11.875% senior secured bonds due May 2025.

Additional arrangers on the transaction include J.P. Morgan, Wells Fargo, BMO Capital Markets, MUFG and Capital One.

S&P Global Ratings has assigned a rating of B, with a 3 recovery rating, to the new term loan and affirmed its B issuer rating while raising its outlook to positive from stable. Moody's has assigned a facility rating of B3 while affirming its B2 corporate rating with a stable outlook. Financing will also include a roughly $30 million incremental draw on its ABL revolver, according to Ratings.

Del Monte is a manufacturer and marketer of branded and private-label food products for the U.S. and South American retail markets.