Midday Commentary: American Apparel on track for Thursday pricing, KCA eyes new structure

By Paul A. Harris

Portland, Ore., March 28 - A quiet pre-holiday Thursday came with no new deal announcements in the high yield market.

American Apparel Inc. is on track to price its $200 million offering of seven-year senior secured notes (Caa1/B-) by the end of the session, according to an investor who has taken a look at the deal.

Price talk is in the 13% area, and there is potential for an increase in coupon if the company does not hit a certain leverage threshold in 2013, the investor added.

Also covenants have been tightened up, said the buysider, who added that the order book is believed to be well north of $200 million.

Cowen & Co. and Seaport Group are the bookrunners.

The Los Angeles-based vertically integrated clothing manufacturer plans to use the proceeds to repay debt.

KCA restructuring

Meanwhile the only other Rule 144A high-yield deal on the active forward calendar, KCA Deutag Finance plc's $860 million offering of senior secured notes (expected ratings B3/B), is being restructured, the investor said.

The deal, which kicked off as a seven-year bond that was non-callable for three years at par plus 75% of the coupon, was expected to price before the end of the pre-Easter week but has now been pushed into the week ahead, the source said.

The debt refinancing deal is being led by J.P. Morgan Securities LLC, BofA Merrill Lynch, HSBC, Lloyds TSB and Morgan Stanley & Co.

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