By Paul A. Harris
Portland, Ore., Nov. 7 – Essar Steel Algoma Inc. priced an upsized $375 million issue of five-year senior secured notes (Ba3/B+/) at par to yield 9˝% on Friday, according to a market source, who added that the notes were 101˝ bid, 102 offered at the dealer.
The issue was upsized from $350 million.
The yield printed on top of yield talk. The reoffer price came rich to price talk, which specified a discount.
Deutsche Bank Securities Inc. was the left bookrunner. Goldman Sachs & Co. and Jefferies LLC were the joint bookrunners.
The senior secured notes feature a 25% equity clawback during the non-call period. The clawback was reduced from 40%.
Proceeds, in addition to proceeds from a $375 million term loan, will be used to refinance debt and for general corporate purposes.
The issuer also placed $249 million of 14% junior secured PIK notes due 2021 (B3/B-) with holders of the company’s existing unsecured notes in a tranche that was downsized from $275 million. No further terms on the PIK notes had been circulated by press time on Friday.
The issuer is a Sault Ste. Marie, Ont.-based manufacturer of hot and cold rolled steel products.
| Issuer: | Essar Steel Algoma Inc.
|
| Amount: | $375 million, increased from $350 million
|
| Maturity: | Nov. 15, 2019
|
| Securities: | Senior secured notes
|
| Left bookrunner: | Deutsche Bank Securities Inc.
|
| Joint bookrunners: | Goldman Sachs & Co., Jefferies LLC
|
| Co-managers: | Canaccord, Imperial Capital
|
| Coupon: | 9˝%
|
| Price: | Par
|
| Yield: | 9˝%
|
| Spread: | 790 bps
|
| First call: | Nov. 15, 2016 at 109.5
|
| Trade date: | Nov. 7
|
| Settlement date: | Nov. 14
|
| Ratings: | Moody's: Ba3
|
| Standard & Poor's: B+
|
| Distribution: | Rule 144A and Regulation S for life
|
| Price talk: | At a discount to yield 9˝%
|
| Marketing: | Roadshow
|
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