By Paul Deckelman
New York, Dec. 4 - Essar Steel Algoma Inc. priced a $400 million issue of five-year first-lien senior secured notes (B3/B+) on Friday to yield 9¾%, high yield syndicate sources said.
The 9 3/8% coupon bonds due March 15, 2015 priced at 98.51376.
The deal came in at the tight end of pre-deal price talk which had circulated in the market earlier Friday, envisioning a yield between 9¾% and 10%.
The Rule 144A/Regulation S offering was brought to market via bookrunner UBS Securities LLC.
The notes are non-callable for the first three years after issue.
The deal was upsized from the originally announced $325 million. Net proceeds were $386.3 million.
The Sault Ste. Marie, Ont.-based steelmaker - part of the Mumbai, India-based Essar Group industrial conglomerate - plans to use net proceeds to repay all amounts outstanding under its existing senior secured term loan facility and its existing senior secured revolving credit facility and will use the remainder for general corporate purposes. The company said that under the terms of an amendment to its senior secured revolving credit facility, being entered into in connection with the offering of the notes, the maximum commitments under such facility will be reduced upon the closing of the bond offering to $350 million from $425 million.
| Issuer: | Essar Steel Algoma Inc.
|
| Amount: | $400 million, upsized from $325 million
|
| Proceeds: | Net: $386.3million
|
| Maturity: | March 15, 2015
|
| Bookrunner: | UBS Securities LLC
|
| Coupon: | 9 3/8%
|
| Price: | 98.51376 |
|
| Yield: | 9¾%
|
| Spread: | 750 basis points
|
| Call features: | Not callable for first three years after issue
|
| Ratings: | Moody's: B3
|
| S&P: B+
|
| Distribution: | Rule 144A/Regulation S
|
| Price talk: | 9¾% to 10%
|
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