Evraz NA Canada trims five-year secured notes to $350 million, sets 7˝% talk; Friday pricing seen

By Paul Deckelman

New York, Oct. 31 – Evraz Inc. NA Canada downsized its planned offering of five-year senior secured notes (Ba3/BB) to $350 million from the originally planned $500 million, high-yield syndicate sources said Friday.

Price talk on the deal was set at 7˝%.

The sources said that the order books on the deal would close at 1 p.m. ET on Friday, with pricing expected sometime thereafter.

The Rule 144A for life deal is being brought to market via joint bookrunner Citigroup Global Markets Inc., which will bill and deliver. Goldman Sachs & Co. is also a joint bookrunner.

Credit Agricole CIB, ING, Moelis, SG CIB and UBS Investment Bank are the co-managers.

The deal was marketed to potential investors this week via a roadshow that began on Monday in New York and New Jersey, continued there on Tuesday, moved to Boston on Wednesday and to the West Coast of the United States on Thursday, where it was scheduled to wrap up Friday.

The notes come with 2.5 years of call protection, after which they become callable at par plus 50% of the coupon for six months. Thereafter the call premium declines to par plus 25% of the coupon for the following 12 months, after which the notes become callable at par until maturity.

The notes also feature a 2.5-year 35% equity clawback at par plus the coupon and a 101% poison put.

In addition the notes feature the usual and customary incurrence-based high-yield covenants.

The Regina, Sask.-based steel producer plans to use the proceeds to repay a portion of its subordinated related-party loan from an affiliate of Evraz Group SA.

The decrease in the deal size will increase the amount of that loan that will remain outstanding.

Accordingly, the company’s restricted payments capacity will be increased to accommodate an additional $150 million repayment of the subordinated related-party loan on a pari passu basis.

Paul A. Harris contributed to this report

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