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PetSmart upsizes to $2.65 billion, sets talk on two-part notes; pricing Friday
By Paul A. Harris
Portland, Ore., Oct. 29 – PetSmart LLC and PetSmart Finance Corp. upsized their two-part offering of high-yield notes to $2.65 billion from $2.35 billion, shifting $300 million from the bank loan, market sources said on Thursday.
Pricing on all tranches, secured notes, secured loan and unsecured bonds widened substantially.
For the bond tranches, an upsized $1.5 billion (from $1.2 billion) of seven-year non-call three-year senior secured notes (B1/B) are talked to yield in the 6½% area, versus early guidance in the mid-5% area.
The eight-year non-call three-year unsecured notes (Caa1/CCC+) are talked in the 9% area, versus early guidance that had them coming 200 basis points to 225 bps in back of the secured notes, implying 8½% to 8¾%.
Spread talk on the downsized $2 billion term loan widened to Libor plus 575 bps from early talk of Libor plus 400 bps to 425 bps.
All tranches may be subject to further widening, market sources say.
The secured bonds and secured loan are in fair shape, a trader said, adding that “there is still wood to chop.”
A more dire situation remains with respect to the unsecured bonds, the trader added.
Books on the bond deal close at 10:30 a.m. ET on Friday, with the deal set to price thereafter.
Joint bookrunner Barclays will bill and deliver. J.P. Morgan Securities LLC, Apollo, Credit Suisse Securities (USA) LLC, Citigroup Global Markets Inc., Jefferies LLC, MUFG, RBC Capital Markets Corp., UBS Securities LLC and Wells Fargo Securities LLC are also joint bookrunners.
The secured bonds feature a special call provision that would allow the issuer to redeem 10% of the notes annually at 103 during the non-call period.
The Phoenix-based pet specialty retailer plans to use proceeds to refinance an existing term loan and existing notes.
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