Communications Sales & Leasing downsizes two-part deal to $1.51 billion, allocating Thursday

By Paul A. Harris

Portland, Ore., April 15 – Communications Sales & Leasing, Inc. downsized its two-part offering of high-yield notes to $1.51 billion from $1.65 billion, shifting $140 million of the proceeds to its concurrent term loan, according to a market source.

The Rule 144A and Regulation S with registration rights deal now includes a downsized $400 million tranche of eight-year senior secured notes (Ba3/BB), which come with three years of call protection.

The secured notes, downsized from $540 million, launched at 6%; yield talk in the 6¼% area surfaced earlier in the day.

The unsecured tranche is still comprised of $1.11 billion of 8.5-year senior notes (B3/B), which come with four years of call protection. The unsecured notes launched at 8¾% on Wednesday afternoon. They were talked earlier in the day to yield 8¾% to 9%.

Books closed Wednesday afternoon, and the deal is set to allocate on Thursday.

BofA Merrill Lynch is the left bookrunner. J.P. Morgan Securities LLC, Barclays, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Goldman Sachs & Co., Morgan Stanley & Co. LLC, RBC Capital Markets, SunTrust Robinson Humphrey Inc., Wells Fargo Securities LLC, BNP Paribas Securities Corp., Deutsche Bank Securities Inc. and MUFG are joint bookrunners.

The notes in both tranches feature three-year 35% equity clawbacks at par plus the coupon and have 101% poison puts.

Proceeds will help to fund the spinoff of Communications Sales & Leasing, a real estate investment trust, from Little Rock, Ark.-based Windstream Holdings Inc.

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