Gymboree Corp. (GYMB) plans to raise $1.465 billion to pay for the leveraged buyout by Bain Capital Partners that will take the children's clothing retailer private.

Under the arrangement, Bank of America Corp. (BAC), Morgan Stanley (MS) and Credit Suisse Group (CS, CSGN.VX) will provide $720 million in a senior secured term loan, a $520 million senior unsecured bridge facility that has an increasing rate and a $225 million senior secured asset-based revolving credit facility that comes due in five years, according to a filing Monday by Gymboree in connection with the beginning of its tender offer.

Gymboree will have to pay back 1% of the borrowings each year, under terms of the agreement. The company has said it will use 50% of excess cash flow to pay down the financing as well as all cash proceeds netted from asset sales and other issuances of debt, the commitment letter shows.

Gymboree agreed on Oct. 12 to be bought by private-equity firm Bain Capital for $1.8 billion, or $65.40 a share, representing a 22% premium to the prior session's close. The offer was higher then several analysts predicted, but some said the premium was warranted.

"They've got a great business model with very strong cash flows and plenty of growth opportunity with their Crazy 8 concept," Lee Giordano, analyst at Imperial Capital, said at the time the deal was announced. Crazy 8 sells children's clothes generally targeted at moderately affluent families.

The deal came as the seller of accessories for newborns to 12-year-olds had been seeing stronger sales and improved margins after cutting costs during the economic downturn.

And while private equity investors are typically attracted to companies where there are apparent ways to improve profitability, those opportunities may be harder to find at Gymboree thanks in part to management's track record of operating margin expansion over the past five years and the company's solid balance sheet, wrote John Zolidis, analyst at Buckingham Research Group.

Still, as children's wear is less fashion driven and has generally held up better in the economic downturn, Bain may like the company's growth prospects even in the midst of prolonged high unemployment, analysts say.

"Parents will spend on their kids even in unpredictable economic times," said Giordano.

Gymboree shares closed up 2 cents to $64.96 on Monday.

-By Karen Talley, Dow Jones Newswires; 212-416-2196; karen.talley@dowjones.com

(Veronica Dagher contributed to this article.)
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