Real estate franchise and brokerage company Realogy Corp. said Monday it took out $515 million in loans in a debt restructuring that will reduce the company’s debt by $70 million.

Realogy was acquired by an affiliate of Apollo in April 2007 in a leveraged deal that left the company burdened with debt.

Real estate franchise and brokerage company Realogy Corp. said Monday it took out $515 million in loans in a debt restructuring that will reduce the company’s debt by $70 million.

Realogy was acquired by an affiliate of Apollo in April 2007 in a leveraged deal that left the company burdened with debt.

Realogy, whose franchise group includes the CENTURY 21, Coldwell Banker and ERA brands, recently reported short- and long-term debts totaling $7.31 billion as of June 30, down from $7.46 billion at the end of last year.

Realogy said Monday it plans to take out an additional $135 million in loans on Oct. 9, subject to lender commitments, for a total of $650 million in new borrowing.

Realogy said it will pay down at least $365 million of borrowings on the $750 million revolving credit facility that’s part of more than $3 billion in senior secured debt. That will help the company remain within contractual debt ratios that are scheduled to tighten at the end of the month.

The company acknowledged that the debt exchange is larger in scope than the plan it announced last week. In announcing the plan, Realogy said it expects to post a third-quarter net loss of $20 million to $25 million on $1.14 billion to $1.17 billion in revenue (see story).

Part of the proceeds of the new second-lien term loans, which carry an interest rate of 13.5 percent and mature in 2017, will be used to pay down Realogy’s obligations to senior creditors, the company said. …CONTINUED

Realogy said the new loans will allow it to refinance $220 million in bonds held by Icahn Partners LP, which stood in the way of another planned debt exchange plan last year. The bonds pay 11.75 percent interest.

Private equity firm Apollo Management LP’s ownership of Realogy bonds will increase to $970 million, up from $875 million previously.

Last month Realogy said the 5.1-to-1 debt ratio on its $3.4 billion in senior secured debt as of the end of June was within the maximum 5.35-to-1 ratio stipulated in the credit agreement. But the ratio steps down to 5-to-1 on Sept. 30, and then to 4.75-to-1 on March 31, 2011.

Realogy’s borrowings under its senior secured credit facility are mostly tied to short-term interest rates, such as the three-month London Interbank Offer Rate (LIBOR), which are below historical norms.

On more than $3.1 billion in outstanding term loans in the senior credit facility at the end of June, Realogy was paying 4.21 percent interest.

Interest rates on the revolving loans in the senior secured credit facility are potentially even lower. Realogy can either pay 3-month LIBOR plus 2.25 percent (compared to LIBOR plus 3 percent for senior term loans), or JPMorgan Chase Bank NA’s prime rate plus 1.25 percent (compared to prime rate plus 2 percent for senior term loans). The revolving loans, however, are subject to an adjustment based on the attainment of certain leverage ratios.

With $3.7 billion in debt tied primarily to 3-month LIBOR, a 1 percent increase or decrease in short-term rates can affect interest-rate expenses by $31 million per quarter, Realogy pointed out in its last quarterly report.

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