By Paul Deckelman
New York, Oct. 31 – Harland Clarke Holdings Corp. priced a $450 million add-on (B1/BB-) to its existing 8 3/8% senior secured notes due Aug. 15, 2022, high-yield syndicate sources said Tuesday.
The deal was downsized by $50 million from an originally announced $500 million.
The add-on priced at 104.75, in line with price talk, for a 6.733% yield to worst.
The Rule 144A and Regulation S for life deal was 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 (USA) Inc. and Wells Fargo Securities LLC.
Besides Harland Clarke Holdings, Harland Clarke Corp., Scantron Corp., Checks in the Mail, Inc., Valassis Communications, Inc., Valassis Direct Mail, Inc. and Valassis Manufacturing Co. were co-issuers on the deal.
The add-on tranche will have the same features as the original $350 million of the notes that priced at par in a regularly scheduled forward calendar deal back on Feb. 2 – it will first become callable on Feb. 15, 2019 at 104.188, have a 35% equity clawback at 108.375 until Feb. 15, 2019 and a 101% change-of-control provision.
The 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, a San Antonio-based provider of media delivery, payment solutions and marketing services, plans to use the add-on proceeds, along with the proceeds from the company’s concurrent new term loan financing, to refinance its existing tranche B-5 term loan and tranche B-6 term loan and pay the outstanding borrowings under its ABL facility. The syndicate sources said that some of the proceeds may also now be used to provide cash for the company’s balance sheet.
While the bond deal was being downsized by $50 million, the sources said the new six-year covenant-light first-lien term loan being lined up was upsized by $100 million to $1.78 billion from $1.68 billion originally.
| Issuers: | Harland Clarke Holdings Corp., Harland Clarke Corp., Scantron Corp., Checks in the Mail, Inc., Valassis Communications, Inc., Valassis Direct Mail, Inc. and Valassis Manufacturing Co.
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| Amount: | $450 million, downsized from $500 million
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| Security: | Senior secured notes
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| Maturity: | Aug. 15, 2022
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| Bookrunners: | Credit Suisse Securities (USA) LLC, BofA Merrill Lynch, Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Jefferies LLC, Macquarie Capital (USA) Inc. and Wells Fargo Securities LLC
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| Co-managers: | Fifth Third Securities, Inc., Regions Securities LLC and Eaglehill Advisors LLC
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| Coupon: | 8 3/8%
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| Price: | 104.75
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| Yield to worst: | 6.733%
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| Spread: | 498 bps over UST 3.625% due Feb. 15, 2021
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| Call: | Non-callable (other than via a make-whole call at 50 bps over Treasuries) until Feb. 15, 2019, then at 104.188; callable on or after Feb 15, 2020 at 102.094, and finally callable at par on or after Feb. 15, 2021
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| Equity clawback: | Until Feb. 15, 2019 for up to 35% of the issue at 108.375
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| Change-of-control put: | 101%
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| Trade date: | Oct. 31
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| Settlement date: | Nov. 3 (T+3)
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| Ratings: | Moody’s: B1
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| S&P: BB-
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| Distribution: | Rule 144A and Regulation S for life
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| Price talk: | 104.75
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| Marketing: | Roadshow
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| Original issue: | $350 million, upsized from $300 million, priced at par on Feb. 2, 2017
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| Total amount: | $800 million
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