E-mail us: service@prospectnews.com Or call: 212 374 2800
Bank Loans - CLOs - Convertibles - Distressed Debt - Emerging Markets
Green Finance - High Yield - Investment Grade - Liability Management
Preferreds - Private Placements - Structured Products
 
Published on 11/5/2014 in the Prospect News Private Placement Daily.

New Issue: NewStar to place up to $300 million 8.25% notes with Franklin Square

By Jennifer Chiou

New York, Nov. 5 – NewStar Financial, Inc. announced that will place up to $300 million of 8.25% subordinated notes due 2024 to funds managed by Franklin Square Capital Partners in a strategic investment that is expected to be completed in multiple closings.

According to a press release, NewStar, GSO Capital Partners, the credit division of Blackstone, and Franklin Square have formed a strategic relationship to help expand NewStar's lower middle-market lending and asset management activities.

The Franklin Square funds have committed to purchase $200 million of the subordinated notes by the end of the year and an additional $100 million of the notes within one year in one or more tranches of no less than $25 million.

The issue will include warrants exercisable for 12 million shares of common stock at an exercise price of $12.62, the release stated. The company’s stock closed at $13.18 (Nasdaq: NEWS) on Wednesday.

The 10-year warrants will be issued and sold in two tranches. The first tranche of warrants will be exercisable for roughly 9.5 million NewStar common shares, which represents 19.9% of the company's outstanding shares. The second tranche will be exercisable for about 2.5 million shares.

The notes include a payment-in-kind feature that allows the company, at its option, to elect to have interest accrued at a rate of 8.75% added to the principal of the notes instead of paying it in cash.

The notes are callable during the first three years with payment of a make-whole premium. The prepayment premium decreases to 103% and 101% after the third and fourth anniversaries of the closing, respectively. They are callable at par after year five.

NewStar is a Boston-based middle-market commercial lender.

Issuer:NewStar Financial, Inc.
Issue:Subordinated notes
Amount:$300 million (maximum)
Maturity:2024
Coupon:8.25% in cash or 8.75% in kind
Call option:With make-whole premium during first three years; prepayment premium of 103% in year three and 101% in year four; at par in year five
Warrants:For 12 million shares
Warrant expiration:10 years
Warrant strike price:$12.62
Investor:Franklin Square Capital Partners
Announcement date:Nov. 5

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.