By Paul Deckelman
New York, Oct. 31 – Evraz Inc. NA Canada priced a downsized $350 million offering of five-year senior secured notes (Ba3/BB) at par on Friday to yield 7˝%, according to high-yield syndicate sources.
The pricing was in line with price talk.
The issue was reduced in size from an originally planned $500 million.
The Rule 144A for life and Regulation S deal was brought to market via joint bookrunner Citigroup Global Markets Inc., which will bill and deliver. Goldman Sachs & Co. is also a joint bookrunner.
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, wrapping up on 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. After that 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% change-of-control 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.
| Issuer: | Evraz Inc. NA Canada
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| Amount: | $350 million (downsized from original $500 million)
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| Maturity: | Nov. 15, 2019
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| Securities: | Senior secured notes
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| Joint bookrunners: | Citigroup Global Markets Inc. (billing and delivery), Goldman Sachs & Co.
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| Co-managers: | Credit Agricole CIB, ING, Moelis, SG CIB and UBS Investment Bank
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| Coupon: | 7˝%
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| Price: | Par
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| Yield: | 7˝%%
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| Spread: | 589 bps versus 1.500% Treasury due Oct. 31, 2019
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| Call protection: | Non-callable until May 15, 2017, except for make-whole call at Treasuries plus 50 bps; callable on or after May 15, 2017 at 103.75%, on or after Nov. 15, 2017 at 101.875% and on or after Nov. 15, 2018 at par.
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| Equity clawback: | For up to 35% of issue at 107.5 until May 15, 2017
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| Change of control: | 101%
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| Trade date: | Oct. 31
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| Settlement date: | Nov. 7 (T+5)
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| Ratings: | Moody’s: Ba3
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| Standard & Poor's: BB
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| Distribution: | Rule 144A for life and Regulation S
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| Price talk: | 7˝%
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| Marketing: | Roadshow
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