By Paul A. Harris
Portland, Ore., June 16 – Madison IAQ, LLC priced an upsized $1.735 billion of high-yield notes in two tranches on Wednesday, according to market sources.
The deal included an upsized $700 million of seven-year senior secured notes (B1/B) that priced at par to yield 4 1/8%. The tranche size increased from $600 million. The yield printed at the tight end of yield talk in the 4¼% area.
The offering also included an upsized $1.035 billion of eight-year senior unsecured notes (Caa1/CCC+) that priced at par to yield 5 7/8%. The tranche size increased from $885 million. The yield printed at the tight end of yield talk in the 6% area.
The 5 7/8% unsecured notes broke to a premium in the secondary market, according to a trader, who had them at par ½ bid, 101 offered late Wednesday.
However, the 4 1/8% secured notes were wrapped around the issue price at 99¾ bid, par ¼ offered, suggesting that investors were valuing yield above security, the trader said.
The bond deal was upsized by $250 million across both tranches in a restructuring of the debt financing that saw the concurrent bank loan reduced to $1.825 billion from $1.925 billion.
Goldman Sachs & Co. LLC was the left bookrunner for the bond deal. Joint bookrunners were Citigroup Global Markets Inc., CIBC World Markets Corp., Barclays, BofA Securities Inc., Capital One Securities Inc., HSBC Securities (USA) Inc., MUFG and Stifel Nicolaus & Co. Inc.
The Chicago-based provider of indoor air quality solutions plans to use the proceeds from the debt and equity from Madison Industries to fund the acquisition of Nortek Air from Melrose Industries plc and refinance certain debt.
| Issuer: | Madison IAQ, LLC
|
| Amount: | $1.735, increased from $1.485 billion
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| Left bookrunner: | Goldman Sachs & Co. LLC
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| Joint bookrunners: | Citigroup Global Markets Inc., CIBC World Markets Corp., Barclays, BofA Securities Inc., Capital One Securities Inc., HSBC Securities (USA) Inc., MUFG and Stifel Nicolaus & Co. Inc.
|
| Trade date: | June 16
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| Settlement date: | June 21
|
| Distribution: | Rule 144A and Regulation S for life
|
| Marketing: | Roadshow
|
|
|
| Secured notes
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| Amount: | $700 million, increased from $600 million
|
| Issue: | Senior secured notes
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| Maturity: | June 30, 2028
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| Coupon: | 4 1/8%
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| Price: | Par
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| Yield: | 4 1/8%
|
| Spread: | 297 bps
|
| Call protection: | Three years
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| Price talk: | 4¼% area
|
|
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| Unsecured notes
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| Amount: | $1.035 billion, increased from $885 million
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| Issue: | Senior unsecured notes
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| Maturity: | June 30, 2029
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| Coupon: | 5 7/8%
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| Price: | Par
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| Yield: | 5 7/8%
|
| Spread: | 455 bps
|
| Call protection: | Three years
|
| Price talk: | 6% area
|
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