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CSK Auto to sell $225 million notes due June 2006
By Paul A. Harris
St. Louis, Mo., Nov. 29 - CSK Auto, Inc. plans to sell $225 million of senior notes due June 15, 2006 with the roadshow beginning Friday, markets sources told Prospect News. The deal, via joint bookrunners Credit Suisse First Boston, J.P. Morgan and UBS Warburg, is set to price late in the week of Dec. 3.
The notes will be sold under Rule 144A and will be non-callable for three years.
Proceeds will be used to finance the Phoenix, Ariz.-based aftermarket auto parts retailer's refinancing, including repayment of bank debt.
When asked why a maturity was fixed on the deal at launch, a syndicate source told Prospect News: "They already know when they want it to mature because they have sub notes outstanding, and they want this (new issuance) to come six months inside of the existing subs."
The company announced in a Thursday press release that in addition to the bonds, CSK Auto, Inc. expects to enter into a new three year $325.0 million senior secured, asset-based credit facility.
The release also stated that CSK Auto Corp., the parent of CSK Auto, Inc., expects to issue $50 million of 7% convertible subordinated debentures due Dec. 2006 through a private placement, with investors to include an affiliate of Investcorp., one of CSK's principal shareholders. These debentures will convert at $8.69 a share and although they will not be redeemable the company expects to require conversion under certain circumstances which it anticipates being satisfied within 150 days of the refinancing closing. CSK will also convert $30 million of existing 7% convertible subordinated notes into 4.5 million shares of CSK Auto Corp. common stock.
CSK said the refinancing will reduce debt, eliminate scheduled bank debt amortization payments before the end of 2004, extend maturities and enhance liquidity.
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