Morning Commentary: High-yield primary week begins quietly; three bond offerings being shopped

By Paul Deckelman

New York, Oct. 30 – The crossover week between October and November begins on a quiet note in the high-yield primary arena, with three prospective new note issues collectively worth $1.58 billion being shopped so far.

Last week saw a total of nine new U.S. dollar-denominated and fully junk-rated deals price, generating $6.01 billion of proceeds, according to data compiled by Prospect News.

One of this week’s three anticipated new deals so far is actually a holdover from last week.

Consol deal a holdover

Consol Mining Corp., a Pittsburgh-based coal mine operator, had been expected to price its $350 million offering of senior secured second-lien notes due 2025 at the tail end of last week, but that did not happen and the issue was floated off to this week.

That Rule 144A and Regulation S transaction will come to market via J.P. Morgan Securities LLC.

The most recent guidance on the issue envisioned a yield in the 9% area.

The company – which is being spun off from its corporate parent, Consol Energy Inc., a Pittsburgh-based oil and natural gas exploration and production company – plans to use the new-deal proceeds, together with borrowings under new term loan facilities and a revolving credit facility to be entered into upon its separation from Consol Energy, to fund that spinoff via a payment to Consol Energy under the terms of the coming separation, to refinance the existing revolver debt of CNX Coal Resources LP, to fund working capital needs and for general corporate purposes.

Harland Clarke eyes add-on

Harland Clarke Holdings Corp., a San Antonio-based provider of media delivery, payment solutions and marketing services, was heard last week to be shopping around a $500 million add-on to its existing 8 3/8% senior secured notes due Aug. 15, 2022.

Syndicate sources said that order books on the deal are scheduled to close at 5 p.m. on Monday, with pricing expected on Tuesday.

Talk on the deal is for a pricing at 104.75.

That Rule 144A and Regulation S for life deal is being brought to market via joint bookrunners Credit Suisse Securities (USA) LLC, BofA Merrill Lynch, Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Jefferies LLC, Macquarie Capital and Wells Fargo Securities LLC.

Fifth Third Bank, Regions Securities LLC and Eagle Hill will be co-managers on the issue.

The add-on tranche will have the same features as the original $350 million deal that priced back on Feb. 2, 2017 – it will become callable on Feb. 15, 2019 at 104.188, have a 35% equity clawback at 108.375 until Feb. 15, 2019 and a 101% poison put.

The new Rule 144A tack-on notes will become immediately fungible with the existing Rule 144A notes. The Regulation S tack-on notes will become fungible with the existing Regulation S notes at the conclusion of a 40-day restriction period.

Harland Clarke plans to use the add-on proceeds to refinance its existing tranche B-5 term loan and tranche B-6 term loan and pay the outstanding borrowings under its ABL facility.

Acrisure announces deal

Acrisure LLC and Acrisure Finance, Inc. announced plans on Monday for an offering of $725 million senior notes due 2025.

The company was heard by high-yield syndicate sources to be starting a roadshow on Monday for the offering, with pricing expected on Friday of this week.

The Rule 144A and Regulation S deal will be brought to market via J.P. Morgan Securities LLC.

The notes will come with three years of call protection.

Caledonia, Mich.-based insurance brokerage Acrisure – the 14th largest brokerage based in the United States in terms of revenues in 2016, according to the company announcement – plans to use the proceeds from the bond deal to replace all of its existing second-lien notes, to pay related fees and expenses, and to fund acquisitions.

The company also said that in connection with the notes issue, it plans to reprice and increase the size of its existing first-lien term loan facility, “and make certain other modifications.”

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