By Paul A. Harris
St. Louis, Feb. 2 - Covalence Specialty Materials priced a downsized $265 million issue of 10-year senior subordinated notes (B3/CCC+) at par to yield 10¼% on Thursday, according to an informed source.
The yield came on the tight end of the 10¼% to 10½% price talk.
Banc of America Securities LLC, Credit Suisse, Merrill Lynch and Morgan Stanley were joint bookrunners for the notes which were sold via Rule 144A with registration rights. Bear Stearns & Co. and CIBC World Markets were co-managers.
Proceeds will be used to fund Apollo Management's acquisition of the company from Tyco International.
In a restructuring of its financing, the company shifted $25 million of proceeds to its term loan B, which was upsized to $350 million from $325 million. Meanwhile the company downsized a second-lien tranche to $175 million from $200 million, and shifted it to the bank loan market, abandoning a proposed $200 million tranche of second-lien senior secured floating-rate notes. In addition there was a $30 million working capital adjustment to the financing.
In total the bond offering was downsized from $495 million.
The issuer is a manufacturer of plastic film products, adhesives and flexible packaging products.
| Issuer: | Covalence Specialty Materials
|
| Amount: | $265 million (decreased from $495 million)
|
| Maturity: | March 1, 2016
|
| Security description: | Senior subordinated notes
|
| Bookrunners: | Banc of America Securities LLC, Credit Suisse, Merrill Lynch, Morgan Stanley
|
| Co-managers: | Bear Stearns, CIBC World Markets
|
| Coupon: | 10¼%
|
| Price: | Par
|
| Yield: | 10¼%
|
| Spread: | 569 basis points
|
| Call features: | Callable on and after March 1, 2011 at 105.125, 103.417, 101.708, par on and after March 1, 2014
|
| Equity clawback: | Until March 1, 2009 for 35% at 110.25
|
| Trade date: | Feb. 2
|
| Settlement date: | Feb. 16
|
| Ratings: | Moody's: B3
|
| Standard & Poor's: CCC+
|
| Distribution: | Rule 144A with registration rights
|
| Price talk: | 10¼%-10½%
|
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