By Paul A. Harris
Portland, Ore., April 11 – Knife River Holding Co., a wholly owned subsidiary of MDU Resources Group, Inc., priced an upsized $425 million issue of eight-year senior notes (Ba3/BB) at par to yield 7¾% on Tuesday, according to market sources.
The issue size increased from $400 million.
The yield printed at the tight end of the 7¾% to 8% yield talk. Initial talk was 8% to 8¼%.
The bonds, which played to $2.7 billion of demand, were trading at 101 1/8 bid, 101 5/8 offered late Tuesday afternoon, according to a trader.
J.P. Morgan Securities LLC was at the left of a syndicate of bookrunners.
The deal came in conjunction with MDU Resources' spinoff of Knife River Corp., a supplier of crushed stone, sand, gravel and related construction materials. The new parent will be Knife River Holding.
Knife River Holding intends to lend or contribute the proceeds from the new issue, including the incremental proceeds resulting from the upsizing of the deal, to Knife River Corp. It is expected that Knife River Corp. will use the proceeds to repay intercompany obligations owing to certain subsidiaries of MDU Resources. The proceeds will be held in escrow until certain conditions relating to the spinoff are satisfied.
Bismarck, N.D.-based MDU Resources Group provides products and services through its regulated energy delivery and construction materials and services businesses.
| Issuer: | Knife River Holding Co.
|
| Amount: | $425 million, increased from $400 million
|
| Issue: | Senior notes
|
| Maturity: | May 1, 2031
|
| Bookrunners: | J.P. Morgan Securities LLC, BofA Securities Inc., MUFG Securities Americas Inc., U.S. Bancorp Investments Inc. and Wells Fargo Securities LLC
|
| Counsel to issuer: | Wachtell, Lipton, Rosen & Katz
|
| Counsel to underwriters: | Simpson Thacher & Bartlett LLP
|
| Coupon: | 7¾%
|
| Price: | Par
|
| Yield: | 7¾%
|
| Spread: | 434 bps
|
| Trade date: | April 11
|
| Settlement date: | April 25
|
| Ratings: | Moody's: Ba3
|
| S&P: BB
|
| Distribution: | Rule 144A and Regulation S
|
| Price talk: | 7¾% to 8%
|
| Marketing: | Roadshow
|
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