McAfee withdraws $1 billion secured notes, shift proceeds to loans; bonds now $2.32 billion

By Paul A. Harris

Portland, Ore., Feb. 2 – Condor Merger Sub, Inc. plans to withdraw a $1 billion offering of seven-year senior secured notes from the bond deal backing the buyout of McAfee Corp. and shift those proceeds to a concurrent bank loan, according to market sources.

The remaining bond deal, downsized from $3.32 billion, is comprised of a $2.32 billion tranche of eight-year senior unsecured notes (Caa2/CCC+) with initial guidance in the low-7% area.

The roadshow is scheduled to wrap up on Thursday.

BofA Securities Inc. is the left bookrunner. Additional bookrunners are Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC, Barclays, Citigroup Global Markets Inc., HSBC Securities (USA) Inc., RBC Capital Markets LLC, UBS Securities LLC, BMO Capital Markets Corp., KKR Capital Markets LLC, Macquarie Capital (USA) Inc., Mizuho Securities USA Inc., MUFG, Nomura Securities International Inc., Wells Fargo Securities LLC, BNP Paribas Securities Corp., CIBC World Markets Corp., Citizens Capital Markets LLC, Credit Agricole CIB, Fifth Third Securities Inc., IMI, KeyBanc Capital Markets Inc., Natixis Securities Americas LLC, Scotia Capital (USA) Inc., SG Americas Securities LLC, SMBC Nikko Securities America Inc., Standard Chartered Bank, Stifel Nicolaus & Co. Inc. and TD Securities (USA) LLC.

The notes become callable after three years at par plus 50% of the coupon. They feature a 40% equity clawback at par plus the full coupons during the non-call period. They also feature a 101% poison put.

The issuing entity, Condor Merger Sub, will be merged with and into McAfee upon completion of the buyout.

The concurrent term loans increased to $6.66 billion from $5.66 billion equivalent with the $1 billion shift of proceeds from the withdrawn secured notes. The loan is being syndicated in dollar- and euro-denominated tranches.

Proceeds from the unsecured notes and term loans plus a preferred stock offering and equity contributions from investors will be used to fund the acquisition of McAfee by an investor group led by Advent International Corp., Permira Advisers LLC, Crosspoint Capital Partners, Canada Pension Plan Investment Board, GIC Private Ltd. and Abu Dhabi Investment Authority, expected to close in first half of 2022.

Proceeds will also be used to repay substantially all debt of the company and its subsidiaries, and for general corporate purposes.

McAfee is a San Jose, Calif.-based provider of online protection for consumers.

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