Published on 8/11/2020 in the Prospect News High Yield Daily.
New Issue: Covanta prices $400 million 10-year notes at par to yield 5%
By Paul A. Harris
Portland, Ore., Aug. 11 – Covanta Holding Corp. priced a $400 million issue of 10-year senior notes (B1/B) at par to yield 5% in a Tuesday drive-by, according to market sources.
The yield printed at the tight end of the 5% to 5¼% yield talk. Initial talk had the deal coming to yield in the 5¼% area.
J.P. Morgan Securities LLC, BofA Securities Inc., Citizens Capital Markets Inc., Credit Agricole CIB, MUFG and SMBC Nikko Securities America Inc. were the joint bookrunners.
The Morristown, N.J.-based provider of energy-from-waste and industrial waste management services plans to use the proceeds, along with cash on hand and/or direct borrowings under Covanta Energy, LLC's revolving credit facility, to pay off its 5 7/8% senior notes due 2024 on Sept. 10, 2020. In the period between the closing of the note offering and the redemption date, the company intends to use a portion of the net proceeds to repay all or a portion of revolver borrowings outstanding under Covanta Energy, LLC's revolving credit facility and invest the remaining proceeds in short-term interest-bearing accounts, securities or similar investments.
| Issuer: | Covanta Holding Corp.
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| Amount: | $400 million
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| Maturity: | Sept. 1, 2030
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| Securities: | Senior notes
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| Bookrunners: | J.P. Morgan Securities LLC, BofA Securities Inc., Citizens Capital Markets Inc., Credit Agricole CIB, MUFG and SMBC Nikko Securities America Inc.
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| Senior co-manager: | TD Securities (USA) LLC
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| Co-managers: | BBVA Securities Inc., Capital One Securities Inc., Truist Securities, Inc., Fifth Third Securities, Inc. and HSBC Securities (USA) Inc.
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| Coupon: | 5%
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| Price: | Par
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| Yield: | 5%
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| Spread: | 435 bps over Treasuries
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| Call protection: | Make-whole call at Treasuries plus 50 bps before Sept. 1, 2025, then callable at 102.5, declining annually thereafter to 101.667, 100.833 and par
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| Equity clawback: | Prior to Sept. 1, 2023 for up to 35% of notes at 105 plus accrued interest
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| Trade date: | Aug. 11
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| Settlement date: | Aug. 25
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| Ratings: | Moody's: B1
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| S&P: B
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| Distribution: | SEC registered
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| Price talk: | 5% to 5¼%
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| Marketing: | Drive-by
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