SunCoke Energy's $250 million add-on to 7 3/8% notes talked in 105 area; pricing Tuesday

By Paul Deckelman

New York, April 29 - SunCoke Energy Partners, LP is expected to price its $250 million add-on to its existing 7 3/8% senior notes due Feb. 1, 2020 around 105, "give or take ½ point," high-yield syndicate sources said Tuesday.

They said that the order books on the deal will close at 1:30 p.m. ET, with pricing expected thereafter.

The deal is being brought to market via joint bookrunners Citigroup Global Markets Inc., Barclays, Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC and RBC Capital Markets Corp.

BofA Merrill Lynch, RBS Securities Inc. and Wells Fargo Securities LLC will be the co-managers.

The deal - announced on Monday - was being marketed to potential investors via a roadshow that began with an investor lunch in New York on Monday, with a similar lunch scheduled for Tuesday in Boston.

The notes will be co-issued by the company's wholly owned SunCoke Energy Partners Finance Corp. subsidiary.

The notes are to be sold under Rule 144A and Regulation S and are being offered as additional notes under the indenture under which the company issued its original $150 million of the notes in January 2013.

The notes will have the same terms as the existing notes - they will not be callable until Feb. 1, 2016, and there will be an equity clawback provision in effect until that date as well, allowing for the redemption of up to 35% of the issue at 107.375 using any equity proceeds.

There is also a 101 change-of-control investor put provision, and the indenture covenants will be the same, including proposed modification to the credit facility basket.

The new notes will be fully and unconditionally guaranteed by all of SunCoke's current subsidiaries, other than co-issuer SunCoke Energy Partners Finance, as well as by some of its future subsidiaries.

However, the notes will initially have a different Cusip number than the existing issue and will not be initially fungible with the existing notes for trading purposes. Following the expiration of the applicable restrictions on transferability and resale, the company intends to facilitate the combination of both the existing notes and the new notes under the same unrestricted Cusip and the notes should then be fungible.

Lisle, Ill.-based SunCoke is a publicly traded master limited partnership that manufactures coke used in the blast furnace production of steel and provides coal handling services to the coke, steel and power industries. Its general partner is a wholly owned subsidiary of Sun Coke Energy, Inc.

The company plans to use a portion of the net proceeds from the offering to fund the cash consideration to be paid in connection with its acquisition of an additional 33% ownership interest in each of its Haverhill and Middletown cokemaking facilities and to repay some debt assumed from its sponsor, SunCoke Energy, as part of this acquisition.

On Friday, SunCoke Energy Partners announced plans for a cash tender offer for up to $160 million of its $400 million of outstanding 7 5/8% senior notes due 2019.

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