Clydesdale Acquisition/Novolex cuts notes offering to $1.61 billion, upsizes term loan

By Paul A. Harris

Portland, Ore., March 30 – Novolex Holdings LLC downsized its two-part offering of sustainability-linked notes to $1.61 billion from $1.98 billion, shifting $370 million of proceeds to the concurrent term loan, according to market sources.

The revised bond deal features a downsized $500 million tranche of seven-year senior secured notes (B2/B) talked to yield in the 6¾% area. The secured tranche, downsized from $750 million, had been in the market with initial guidance that had it pricing with an expected discount and with a yield in the low 7% area. Pre-marketing indications had the secured notes coming with a 6¾% coupon at 97.5 to yield in the low 7% area.

The deal also includes a downsized $1.11 billion tranche of eight-year senior notes (Caa2/CCC+) talked to yield 9¾% to 10%. The unsecured tranche, downsized from $1.23 billion, had been in the market with initial guidance that had it pricing with an expected discount to yield 250 basis points to 290 bps behind the secured notes. Pre-marketing indications had the unsecured notes coming with an 8¾% coupon at 96 to yield in the mid-9% area.

Books close at 1 p.m. ET on Wednesday, and the Rule 144A and Regulation S for life deal is set to price thereafter.

Left lead bookrunner Morgan Stanley & Co. LLC will bill and deliver. Credit Suisse Securities (USA) LLC, Goldman Sachs & Co. LLC, Barclays, Deutsche Bank Securities Inc., RBC Capital Markets LLC, Wells Fargo Securities LLC, BNP Paribas Securities Corp., MUFG, HSBC Securities (USA) Inc., BMO Capital Markets Corp., Mizuho Securities USA Inc. and Macquarie Capital (USA) Inc. are the joint bookrunners.

The notes in both tranches become callable after three years at par plus 50% of the respective coupons.

The issuing entity will be Clydesdale Acquisition Holdings Inc.

With the downsizing of the notes, the concurrent term loan is upsized to $3 billion from $2.63 billion.

Proceeds from the notes and the loan will be used to help fund the buyout of the company by Apollo Global Management from Carlyle. Carlyle will retain a minority stake in the company.

Novolex is a Hartsville, S.C.-based manufacturer of packaging products for the foodservice, delivery and carryout, food processor and industrial markets.

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