Headwaters talks $280 million five-year secured notes at 11¾% area with 2-3 points OID

By Paul A. Harris

St. Louis, Oct. 19 - Headwaters Inc. set price talk for its $280 million offering of five-year senior secured notes (B2/B+) at the 11¾% area with 2 points to 3 points of original issue discount on Monday, according to a market source.

Books close at 3 p.m. ET on Tuesday, except for the accounts meeting with management on Tuesday. Pricing is expected to take place by the end of the Tuesday session.

The Rule 144A and Regulation S deal is being led by joint bookrunners Deutsche Bank Securities Inc., Morgan Stanley & Co. Inc. and Bank of America Merrill Lynch.

The notes will come with three years of call protection.

Proceeds will be used to repay bank debt, to fund the tender for the company's 2 7/8% convertible notes and for general corporate purposes.

The offering is contingent upon the entry into a new $70 million four-year senior secured first-lien asset-based revolving credit facility by certain direct wholly owned subsidiaries of the company as borrowers and the company as a guarantor.

Headwaters is a South Jordan, Utah-based provider of products, technologies and services to the energy, construction and home improvement industries.

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