New Issue: Kabel BW prices €2.27 billion equivalent four-part deal, dollar bonds yield 7½%

By Paul Deckelman

New York, March 23 - German cable and broadband operator Kabel BW priced its massive €2.27 billion equivalent four-part bond offering on Wednesday, syndicate sources said.

Kabel BW Erste Beteiligungs GmbH and Kabel Baden-Wuerttemberg GmbH & Co. KG were the official issuers of three out of the four tranches - the $500 million and €800 million mirror tranches of 7½% senior secured notes due 2019 and a €420 million of senior secured floating-rate notes due 2018.

The two fixed-rate tranches, which priced at par, came to market at revised price talk that was released Wednesday morning envisioning a yield of 7½% - tighter than the original talk of a yield in the 7¾% area for each tranche that had circulated in the market on Tuesday. Additionally, the euro-denominated tranche was downsized from the originally announced $850 million.

The floating-rate tranche was meanwhile upsized from the originally announced €350 million. It also priced at par to yield 425 bps over the 3-month Euribor rate - again, in line with revised price talk, which had tightened from the initial talk of 425 to 450 bps over the Euribor rate.

Kabel's Musketeer GmbH unit was the official issuer of the fourth tranche, for €680 million of 9½% unsecured senior notes due 2021. Those notes, which priced at par, came at the revised price talk of 9½%, which was tightened from Tuesday's talk in the 9¾% area.

Credit Suisse Securities (Europe) Ltd., Deutsche Bank AG, London Branch and J.P. Morgan Securities Ltd. were the bookrunners on the Rule 144A/Regulation S deal, which was sold without registration rights.

The deal, which first surfaced in the market on Monday, was marketed to investors via a short roadshow process on Tuesday and Wednesday in Europe, including London, Paris and Frankfurt, and in the United States.

The eight-year notes will have four years of call protection and the 10-years are non-callable for five years. The sources said the seven-year floaters will only have one year of call protection.

Proceeds from the deal will be a part of the financing for the German cabler's acquisition by U.S. billionaire John Malone's international media conglomerate, Liberty Global Inc.

Bookrunners:	Credit Suisse Securities (Europe) Ltd., Deutsche Bank AG, London Branch and J.P. Morgan Securities Ltd.
Trade date:	March 23
Settlement:	March 31 (T+6)
Distribution:	Rule 144A/Regulation S, no registration rights
Marketing:	Short roadshow
Eight-year euro notes
Issuers:	Kabel BW Erste Beteiligungs GmbH and Kabel Baden-Wuerttemberg GmbH & Co. KG
Amount:	€800 million (downsized from original €850 million)
Securities:	Senior secured fixed-rate notes
Maturity:	March 15, 2019
Coupon:	7½%
Price:	Par
Yield:	7½%
Spread:	448 bps over 3¾% Bund due January 2019
Call features:	Non-callable through March 15, 2015, except for a make-whole call at 50 bps over Bunds; then callable at 103.75, 101.875, and on or after March 15, 2017, at par.
Equity clawback:	Until March 15, 2014, for up to 40% of issue at 107.5
Ratings:	Moody's: B1
	S&P: B+
Price talk:	7½% (revised from original talk of the 7¾% area)
Eight-year dollar notes
Issuers:	Kabel BW Erste Beteiligungs GmbH and Kabel Baden-Wuerttemberg GmbH & Co. KG
Amount:	$500 million
Securities:	Senior secured fixed-rate notes
Maturity:	March 15, 2019
Coupon:	7 ½%
Price:	Par
Yield:	7½%
Spread:	460 bps over 2¾% Treasury due February 2019
Call features:	Non-callable through March 15, 2015, except for a make-whole call at 50 bps over Treasuries; then callable at 103.75, 101.875, and on or after March 15, 2017, at par.
Equity clawback:	Until March 15, 2014, for up to 40% of issue at 107.5
Ratings:	Moody's: B1
	S&P: B+
Price talk:	7½% (revised from original talk of the 7¾% area)
Floating-rate notes
Issuers:	Kabel BW Erste Beteiligungs GmbH and Kabel Baden-Wuerttemberg GmbH & Co. KG
Amount:	€420 million (upsized from original €350 million)
Securities:	Senior secured floating-rate notes
Maturity:	March 15, 2018
Coupon:	3-month Euribor plus 425 bps
Price:	Par
Yield:	3-month Euribor plus 425 bps
Call features:	Non-callable through March 15, 2012; then callable at 101 and on or after March 15, 2013, at par
Price talk:	Euribor rate plus 425 bps (tightened from original talk of Euribor rate plus 425 bps to 450 bps
Ten-year notes
Issuer:	Musketeer GmbH
Maturity:	March 15, 2021
Coupon:	9½%
Price:	Par
Yield:	9½%
Spread:	629 bps over 2½% Bund due January 2019
Call features:	Non-callable through March 15, 2016, except for a make-whole call at 50 bps over Bunds; then callable at 104.75, 103.16, and on or after March 15, 2019, at par.
Equity clawback:	Until March 15, 2014, for up to 40% of issue at 109.5
Price talk:	9½% (revised from original talk of the 9¾% area)

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