Harland Clarke downsizes two-part note offering to $815 million, sets yield talk

By Paul A. Harris

Portland, Ore., Jan. 24 - Harland Clarke Holdings Corp. downsized its two-part offering of high-yield notes to $815 million from $865 million and shifted $50 million of the proceeds to its term loan, an informed source said on Friday.

The company also set price talk.

The San Antonio-based company is offering a downsized $540 million of seven-year senior unsecured notes (Caa1/B-), which are talked with a yield in the 9¼% area. The tranche was downsized from $590 million. The unsecured notes become callable in three years at par plus 75% of the coupon.

The size of the secured tranche remained unchanged at $275 million; the six-year senior secured notes (B1/B+) are talked with a yield in the 7% area. They become callable in three years at par plus 50% of the coupon.

In addition to the downsizing and price talk there were also covenant changes.

Books close at 2 p.m. ET on Monday, and the deal is set to price thereafter.

Credit Suisse Securities (USA) LLC, BofA Merrill Lynch, Citigroup Global Markets Inc., Deutsche Bank Securities Inc., PNC Capital Markets LLC and Union Bank are the joint bookrunners for the Rule 144A and Regulation S for life offering.

The notes in both tranches feature three-year 35% equity clawbacks and 101% poison puts.

Proceeds will be used to help fund the acquisition of Valassis and to refinance debt.

Harland Clarke is a provider of payment, marketing and security services.

Valassis is a Livonia, Mich.-based provider of media solutions.

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