RioCan REIT reopens debentures for single buyer; Golf Town, Golfsmith talk deal; Baytex rises

By Cristal Cody

Prospect News, July 12 - RioCan Real Estate Investment Trust reopened its 3.85% seven-year senior debentures on Thursday to sell C$25 million after one buyer expressed interest in the issue, the company told Prospect News.

The deal priced early in the day and went smoothly, said Rags Davloor, chief financial officer of RioCan REIT.

"They approached us asking whether we were interested in reopening our issue, and they presented a price that we felt was a good price, so we reopened it for a single buyer," Davloor said.

"We weren't looking to reopen it for a larger amount, but this bondholder expressed an interest at that size, and the price we felt was very attractive [so] we were happy to open it up."

In the Canadian high-yield market, the roadshow for the offering of C$150 million secured notes from Golf Town Canada Inc. and Golfsmith International Holdings, Inc. continued with pricing expected on Friday "at the earliest," a syndicate source said. "We're still trying to finalize terms and conditions."

Other high-yield market activity on Thursday included the continuation of the roadshow for a C$400 million offering of senior notes (B1/BB+/) from Richmond, B.C.-based gaming, entertainment and hospitality company Great Canadian Gaming Corp.

"Great Canada roadshow was in New York today, Boston on Friday and back to Toronto for two days, so it probably should price Wednesday or Thursday of next week," a bond source said.

Scotia Capital Inc. and HSBC Capital (Canada) Inc. are the bookrunners. BMO Capital Markets Corp., CIBC World Markets Inc. and RBC Capital Markets Corp. are joint lead managers. National Bank Financial Inc. is the co-manager.

In the secondary market, Baytex Energy Corp.'s 6.625% debentures due 2022 priced earlier in the week traded higher, a trader said on Thursday.

"It's rallied a couple points," the trader said.

High-yield bond spreads were mostly unchanged on the day.

Investment-grade bond spreads ended slightly wider. The Markit CDX Series 18 North American investment-grade index eased 2 basis points to a spread of 113 basis points.

Canadian government bonds closed stronger on the day on safe-haven buying. The 10-year note yield dropped 5 bps to 1.63%. The 30-year bond yield fell 3 bps to 2.25%.

RioCan REIT reopens

In the reopening, RioCan Real Estate Investment Trust sold C$25 million of its 3.85% seven-year senior debentures at 101.467 to yield 3.609%, the company said.

The series Q debentures (/BBB-/DBRS: BBB) priced at a spread of 223 bps over the Government of Canada benchmark.

RBC Capital Markets Corp., TD Securities Inc. and Scotia Capital Inc. were the lead managers.

Proceeds will be used to repay debt, including debt incurred under RioCan's operating lines of credit, for property acquisitions, to fund development and for general trust purposes.

The deal was offered under RioCan's June 11 base shelf prospectus.

RioCan REIT originally sold the issue on June 21 in a C$150 million offering at 100.335 to yield 3.795%. The total outstanding is C$175 million.

Toronto-based RioCan REIT is Canada's largest real estate investment trust.

Golfsmith talk

Updated price talk on the joint offering of five-year senior second-lien notes (B/DBRS B low) from Golf Town Canada and Golfsmith is 9.5% to 10%, a syndicate source said on Thursday.

The company held a roadshow over the week in New York and Toronto.

Scotia Capital Inc., TD Securities Inc. and BMO Capital Markets Corp. are the bookrunners. Co-managers are HSBC Capital (Canada) Inc. and National Bank Financial Inc.

The issue is guaranteed by Golf Town Canada Holdings Inc., Golf Town USA Holdings Inc., the issuers, Golf Town USA Inc. and existing restricted subsidiaries and certain future restricted subsidiaries.

The notes are non-callable for two years. In 2014, the notes may be called at par plus half the coupon, in 2015 at par plus a quarter of the coupon and 2016 and subsequently at par.

The notes have a 101% change-of-control put; an equity claw up to 35% in the first two years at par plus the coupon and a Canadian call at the Canada Bond Yield plus 50 basis points.

Proceeds will be used to repay debt, replace the existing Golfsmith ABL facility and return capital to shareholders.

The deal comes as Golf Town plans to acquire U.S. specialty golf retailer Golfsmith International for $6.10 a share, an acquisition that will make it the world's largest specialty golf retailer with 143 stores in Canada and the United States.

Markham, Ont.-based Golf Town is owned by Omers Private Equity. Golfsmith is an Austin, Texas-based golf retailer.

Baytex rises

In secondary trading, Baytex Energy's 6.625% debentures due 2022 climbed to 102.50 bid, 103.50 offered on Thursday, a trader said.

The company sold C$300 million of the series C debentures (B1/BB-/) at par, or a spread of 496.8 bps over the Government of Canada benchmark on Tuesday.

Calgary, Alta.-based Baytex is an energy exploration and production company.

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