By Paul A. Harris
St. Louis, May 19 - Education Management Corp. priced a $760 million two-part offering of notes on Friday, according to an informed source.
The Pittsburgh-based provider of private post-secondary education priced an upsized $375 million issue of eight-year senior notes (B3/CCC+) at par to yield 8¾%, at the tight end of the 8¾% to 9% price talk. The senior note issue was upsized from $320 million.
The company also priced a downsized $385 million issue of 10-year senior subordinated notes (Caa1/CCC+) at par to yield 10¼%, on top of the price talk, which had the subordinated notes coming 150 basis points area behind the senior notes. The subordinated note issue was downsized from $440 million.
Credit Suisse, Goldman Sachs & Co., Merrill Lynch & Co. and Banc of America Securities LLC were joint bookrunners for the Rule 144A with registration rights issue.
Proceeds will be used to fund the acquisition of the company by an investor group led by Providence Equity Partners and Goldman Sachs Capital Partners.
| Issuer: | Education Management Corp.
|
| Amount: | $760 million
|
| Bookrunners: | Credit Suisse, Goldman Sachs & Co., Merrill Lynch & Co., Banc of America Securities LLC
|
| Trade date: | May 19
|
| Settlement date: | June 1
|
| Distribution: | Rule 144A with registration rights
|
|
|
| Senior notes
|
| Amount: | $375 million (increased from $320 million)
|
| Security description: | Senior notes
|
| Maturity: | June 1, 2014
|
| Coupon: | 8¾%
|
| Price: | Par
|
| Yield: | 8¾%
|
| Spread: | 369 bps
|
| Call protection: | Make-whole call at Treasuries plus 50 bps
|
| Ratings: | Moody's: B3
|
| Standard & Poor's: CCC+
|
| Price talk: | 8¾%-9%
|
|
|
| Subordinated notes
|
| Amount: | $385 million (decreased from $440 million)
|
| Security description: | Subordinated notes
|
| Maturity: | June 1, 2016
|
| Coupon: | 10¼%
|
| Price: | Par
|
| Yield: | 10¼%
|
| Spread: | 518 bps
|
| Call protection: | Make-whole call at Treasuries plus 50 bps
|
| Ratings: | Moody's: Caa1
|
| Standard & Poor's: CCC+
|
| Price talk: | 150 bps area behind the senior notes
|
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