By Paul Deckelman and Aleesia Forni
New York, July 31 - LSB Industries, Inc. priced an upsized and restructured $425 million offering of six-year senior secured notes (Ba3/B+) on Wednesday at par to yield 7¾%, a primary market source said.
The deal was announced July 18 in an 8-K filing with the Securities and Exchange Commission and had been expected to price last Thursday, but did not appear at that time.
When it finally did price, the deal had been upsized from the originally announced $400 million.
It was also restructured, with the tenor being shortened to six years from the originally announced eight years, and the notes changed to senior secured from the original senior unsecured notes, the source said.
While call protection was unchanged at three years, as originally intended, the first-call price was set at par plus 50% of the coupon.
The enlarged, revamped deal priced in line with revised price talk envisioning a yield in the 7¾% area.
The notes had originally been talked at a 6¾% area yield last week.
Wells Fargo Securities LLC was the left bookrunner for the Rule 144A and Regulation S with registration rights offer.
BofA Merrill Lynch and J.P. Morgan Securities LLC were also joint bookrunners on the deal.
The Oklahoma City-based diversified industrial company said that the proceeds from the deal will be used to repay the $67.2 million principal balance and the prepayment penalty under its existing term loan facility plus all accrued interest, and for general corporate purposes.
LSB said that general corporate purposes would likely include, among other things, the construction of an ammonia plant, nitric acid plant and concentrator at its chemical facility in El Dorado, Ark., the improvement of reliability, mechanical integrity and safety at all of its chemical facilities and the development of its acquired natural gas leaseholds during the next three years.
The company manufactures and markets products in the chemical and climate control segments.
| Issuer: | LSB Industries, Inc.
|
| Amount: | $425 million, upsized from original $400 million
|
| Expected net proceeds: | $418 million
|
| Description: | Senior secured notes (restructured from originally announced senior unsecured | notes)
|
| Maturity: | Aug. 1, 2019 (restructured from originally planned 2021 maturity)
|
| Bookrunners | Wells Fargo Securities LLC, BofA Merrill Lynch, J.P. Morgan Securities LLC
|
| Co-manager: | Sterne Agee & Leach, Inc.
|
| Coupon: | 7¾%
|
| Price: | Par
|
| Yield: | 7¾%
|
| Spread: | 608 bps vs. 3.125% U.S. Treasury note due May 15, 2019
|
| Call protection: | Non-callable for first three years after issue, other than a make-whole call at T+50 bps through Aug. 1, 2016, then callable at 103.875%, callable at 101.938 on or after Aug. 1, 2017 and, finally, at par on or after Aug. 1, 2018
|
| Equity clawback: | For up to 35% of issue at 107.75 prior to Aug. 1, 2016.
|
| Change of control: | Putable at 101% of principal plus accrued interest
|
| Trade date: | July 31
|
| Settlement date: | Aug. 7 (T+5)
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| Ratings: | Moody's: Ba3
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| Standard & Poor's: B+
|
| Distribution: | Rule 144A and Regulation S with registration rights
|
| Price talk: | 7¾% area, widened from original price talk of 6¾% area
|
| Marketing: | Roadshow
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