By Paul A. Harris
Portland, Ore., March 18 - Cornerstone Chemical Co. priced an upsized $77.5 million issue of non-rated five-year senior PIK toggle notes at par with a cash yield of 10½% on Tuesday, according to an informed source.
The notes pay a 10½% cash coupon, which steps up by 75 basis points to 11¼% for PIK payments.
The deal was upsized from $75 million.
Both the cash and PIK coupons came on top of coupon talk.
Imperial Capital is the bookrunner for the Rule 144A and Regulation S for life notes offering.
In a structural change, call protection was increased to two years from one year, and the first call premium was increased to 105 from 102.
The notes are non-rated; however, the operating company is rated B3 by Moody's Investors Service and B- by Standard & Poor's, the source said.
The issuing entities are H.I.G. BBC Intermediate Holdings, LLC and H.I.G. BBC Holdings Corp., holding companies of Cornerstone Chemical.
The Waggaman, La.-based specialty chemical company plans to use the proceeds to pay a cash dividend to shareholders and to fund a debt service reserve account.
In a separate covenant change, the interest reserve was increased by $4.2 million. The interest reserve, together with the existing operating company restricted payments basket of $4.25 million, covers three cash coupon payments. As a result, there is a $1.8 million net decrease in the dividend.
| Issuer: | H.I.G. BBC Intermediate Holdings, LLC and H.I.G. BBC Holdings Corp. (Cornerstone Chemical Co.)
|
| Amount: | $77.5 million, increased from $75 million
|
| Maturity: | Sept. 15, 2018
|
| Securities: | Senior PIK toggle notes
|
| Bookrunner: | Imperial Capital, LLC
|
| Cash coupon: | 10½%
|
| PIK coupon: | 11¼%
|
| Price: | Par
|
| Cash yield to maturity: | 10½%
|
| First call: | March 15, 2016 at 105
|
| Equity clawback: | 35% at 110.5 until March 15, 2016
|
| Trade date: | March 18
|
| Settlement date: | March 21
|
| Ratings: | Non-rated
|
| Distribution: | Rule 144A and Regulation S for life
|
| Price talk: | 10½% cash coupon, 75 bps step-up for PIK
|
| Marketing: | Roadshow
|
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