KCA Deutag to start roadshow Monday for $375 million seven-year notes

By Paul Deckelman

New York, May 2 - Scotland-based energy drilling contractor KCA Deutag Alpha Ltd. plans to sell $375 million of seven-year senior secured notes as part of a $750 million financing package that also includes a bank loan launched this week, high-yield syndicate sources said Friday.

The sources said that the notes will be brought to market around the middle of the month via joint bookrunners J.P. Morgan Securities LLC, Goldman Sachs & Co., HSBC Securities (USA) Inc. and Lloyds Securities Inc.

The deal will be marketed to investors via a roadshow that will get under way this coming Monday, with pricing expected the following week, on or around May 13.

The notes (expected B3/B/), which are being sold under Rule 144A for the life of the issue, will have three years of call protection.

KCA Deutag is selling the bonds as part of a financing effort that also includes a new six-year secured term loan (B3) that launched at a bank meeting on Monday via Goldman Sachs Bank USA, JPMorgan, HSBC and Lloyds.

At the time that the loan was launched - with price talk of Libor plus 525 basis points to 550 bps with a 1% Libor floor, an original-issue discount of 98½ to 99 and call protection of 102 in year one and 101 in year two - tranche sizes of the loan and the bond deal had not been formalized.

Commitments on the loan are due on May 12.

Proceeds from the loan and the upcoming bond financing will be used to refinance existing bank debt and to add a small amount of cash to the balance sheet.

KCA Deutag was last in the bond market exactly one year ago, when its KCA Deutag Finance plc subsidiary sold $500 million of 9 7/8% senior secured notes due 2018. That scheduled forward calendar deal priced at 96 on May 2, 2013 via another company subsidiary, Globe Luxembourg SCA, yielding 10.681%.

Sara Rosenberg contributed to this report

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