PetSmart pulls $2.65 billion two-tranche notes offering amid investor push-back, market volatility

By Abigail W. Adams

Portland, Me., Oct. 30 – PetSmart LLC and PetSmart Finance Corp. pulled their $2.65 billion megadeal from the market amid investor push-back and market volatility, a source said.

The pet specialty retailer was slated to price an upsized $1.5 billion, from $1.2 billion, tranche of seven-year senior secured notes (B1/B) and a $1.15 billion tranche of eight-year unsecured notes (Caa1/CCC+) on Friday.

Price talk for the deal, which had been in the market since Monday, widened substantially due to investor push-back over loose covenants, a source said.

The last official talk had the secured notes coming with a yield in the 6½% area and the unsecured notes with a yield in the 9% area.

Earlier talk had the secured notes coming in the mid-5% area and the unsecured notes coming 200 basis points to 225 bps behind the secured notes.

Barclays, 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 were bookrunners.

Proceeds from the offering were to be used to fund the divestiture of Chewy and take out PetSmart’s outstanding debt.

PetSmart’s outstanding notes were trading off following news of the pulled offering.

The 7 1/8% senior notes due 2023 were down 2 points to 98¾ in active trading, a source said.

The 5 7/8% senior notes due 2025 were down 1 point to 101½.

The 8 7/8% senior notes due 2025 dropped 3 points to par ½.

© 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.