By Paul Deckelman
New York, June 20 - International Coal Group Inc. priced a notably downsized $175 million issue of eight-year senior notes to yield 10¼% Tuesday - but the new bonds priced wide of pre-deal market price talk, syndicate sources said, in apparent response to less than overwhelming enthusiasm for the deal.
The issue, which on Monday was heard to have been downsized to $175 million from the originally envisioned $250 million, priced Tuesday at par to yield 10¼% - outside of the price talk indicating a yield in the 9¾% to 10% range.
A market source said before the midday pricing that it was his impression that "people aren't that crazy about International Coal, even with the downsizing."
A syndicate source indicated that several covenants had also been changed in order to get the deal done, with the required fixed-charge coverage ratio raised to 2.25 times to 1 from 2.0 times originally, and the level of permitted debt for the company lowered to $450 million from $550 million previously.
The deal was brought to market via joint book-running managers UBS, JP Morgan and Goldman Sachs, as well as co-managers Banc of America Securities and Wachovia Securities. It was marketed to potential investors through a roadshow which began June 12 and which wrapped up Tuesday.
The notes, which are were sold under Rule 144A with registration rights, are non-callable for the first four years after issue.
The Ashland, Ky.-based coal producer plans to use the proceeds of the offering to repay debt, including its revolver and its term loan debt, as well as to fund future capital spending and for general corporate purposes.
| Issuer: | International Coal Group Inc.
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| Amount: | $175 million (downsized from original $250 million)
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| Security description: | Senior notes
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| Maturity: | July 15, 2014
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| Bookrunners: | UBS Investment Bank, JP Morgan, Goldman Sachs
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| Coupon: | 10¼%
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| Price: | Par
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| Yield: | 10¼%
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| Spread: | 510 basis points
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| Call schedule: | Non-callable for first four years; then on July 15, 2010 at 105.125, on July 15, 2011 at 102.563, and on July 15, 2012 at par
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| Pricing talk: | 9¾% to 10%
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| Settlement: | June 23 (T+3)
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| Ratings: | Moody's: B3, stable outlook
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| S&P: CCC+, stable outlook
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| Distribution: | Rule 144A with registration rights
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