By Paul A. Harris
Portland, Ore., June 17 – All Aboard Florida priced an upsized $405 million issue of five-year senior secured PIK toggle notes at par on Tuesday with a 12% cash yield, according to a market source.
The cash yield printed on top of yield talk.
The notes pay a 12% cash coupon, which steps up by 75 basis points to 12¾% for PIK payments.
The issue was upsized from $390 million.
The PIK toggle coupon is structured so that the first coupon payment will be 50% cash and 50% PIK. Thereafter coupon payments may be made entirely in cash, or 50% cash and 50% PIK, with the PIK coupon paying a 75 bps increase to the cash coupon.
A 25 bps coupon step-up takes effect after 90 days unless two ratings agencies assign ratings to the notes.
Call protection increased to 2.5 years from two years. The notes now become callable after 2.5 years at par plus 50% of the coupon.
The company may redeem the notes at par plus the full coupon with proceeds of a government loan during the first 2.5 years. This call premium increased from 75% of the coupon; the call period increased from two years.
J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC were the joint bookrunners.
Proceeds will be used to finance all or part of the design, construction, development and equipping of the Miami to West Palm Beach portion of a higher speed intercity passenger train line from Miami to Orlando.
The deal comes with a mandatory redemption at par if the company abandons the project before the opening deadline and with an offer to purchase the notes at par if the project fails to open by the opening deadline.
The issuing entities are AAR Holdings LLC and AAF Finance Co.
All Aboard Florida, a subsidiary of Florida East Coast Industries, is a Coral Gables, Fla.-based privately owned passenger rail system.
| Issuers: | AAF Holdings LLC and AAF Finance Co. (All Aboard Florida)
|
| Amount: | $405 million, increased from $390 million
|
| Maturity: | July 1, 2019
|
| Securities: | Senior secured PIK toggle notes
|
| Bookrunners: | J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC
|
| Co-manager: | BMO Securities
|
| Cash coupon: | 12%
|
| PIK coupon: | 12¾%
|
| Price: | Par
|
| Cash yield: | 12%
|
| PIK yield: | 12¾%
|
| Call protection: | 2.5 years
|
| Trade date: | June 17
|
| Settlement date: | July 1
|
| Ratings: | Non-rated
|
| Distribution: | Rule 144A and Regulation S for life
|
| Price talk: | 12% area cash yield
|
| Marketing: | Roadshow
|
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