(Bloomberg) -- Grubhub Holdings Inc.’s owner Wonder has approached lenders including private credit firms as it seeks to raise between $400 million and $500 million to refinance the food delivery company’s existing debt, according to people with knowledge of the matter.
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Wonder is seeking to include a payment-in-kind feature in the new financing, which would allow the company to defer at least a portion of its interest payments until the debt’s final maturity, said the people, who asked not to be identified discussing private information.
It is discussing an interest rate of around 13% with potential investors, which would be inclusive of the PIK component, according to one of the people. Private credit lenders typically offer PIK structures to fast-growing tech companies that have predictable revenue streams but need to burn through cash to acquire new customers or develop new products.
Representatives for Grubhub and Wonder declined to comment.
Private credit lenders have considered financing proposals for Grubhub in the past but a deal was never completed, some of the people said. Grubhub has $500 million of notes outstanding, which it issued in 2019 with the help of investment banks at a coupon of 5.5%, according to data compiled by Bloomberg.
Wonder Group Inc. acquired Grubhub last year from Just Eat Takeaway.com for about $650 million, paying $150 million in cash and assuming the $500 million of existing debt.
The food delivery industry has faced pressure particularly in New York City, after the city placed a cap on fees meal-delivery companies could charge restaurants. Grubhub, Doordash Inc. and Uber Technologies Inc. recently agreed to settle a lawsuit over the caps in exchange for changes to the law that the city is expected to submit by the end of the year.
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The ambition of the Grubhub owner to raise up to $50 hundred million for debt refinancing underscores their determination and confidence in overcoming financial challenges, a move that could reshape industry dynamics.
