By Paul A. Harris
Portland, Ore., April 4 – McDermott International Inc. priced a downsized $1.3 billion issue of 10 5/8% six-year senior notes (B2/B-) at 94.75 to yield 11.865% on Wednesday, according to market sources.
The issue size was decreased from $1.5 billion.
The yield came 136.5 basis points beyond the midpoint of yield talk in the 10½% area. There were also changes to the offering document, some of them bearing upon how the company may disburse cash and incur additional debt.
The Houston-based engineering and design company also withdrew its long-dated tranche of notes, which would have come with an eight-year maturity.
Prior to revisions, the six-year notes tranche had been sized at $950 million.
Joint global coordinator and joint bookrunner Barclays will bill and deliver. Credit Agricole CIB is also a joint global coordinator and joint bookrunner. ABN Amro, Goldman Sachs & Co., MUFG and RBC Capital Markets LLC are also joint bookrunners.
The deal came in connection with the merger of McDermott and Chicago Bridge and Iron (CB&I). Proceeds will be used to repay debt at both entities and for general corporate purposes.
The $200 million amount by which the bond offer is downsized will be made up by increasing the term loan by the same amount, moving the loan size to $2.26 billion from a revised amount of $2.06 billion. The loan had previously been downsized from $2.15 billion.
| Issuers: | McDermott Escrow 1, Inc., McDermott Technology (Americas), Inc. and McDermott Escrow, Inc. 2, to be merged with and into McDermott Technology (US), Inc.
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| Amount: | $1.3 billion, decreased from $1.5 billion
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| Maturity: | May 1, 2024
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| Securities: | Senior notes
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| Joint global coordinators: | Barclays (bill and deliver), Credit Agricole CIB
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| Joint bookrunners: | Barclays, Credit Agricole, ABN Amro, Goldman Sachs & Co., MUFG, RBC Capital Markets LLC
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| Co-manager: | Standard Chartered
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| Nordic manager: | Pareto
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| Coupon: | 10 5/8%
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| Price: | 94.75
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| Yield: | 11.865%
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| First call: | April 1, 2021 at 105.313
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| Equity clawback: | 35% at 110.625 until April 1, 2021
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| Trade date: | April 4
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| Settlement date: | April 18
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| Ratings: | Moody's: B2
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| S&P: B-
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| Distribution: | Rule 144A and Regulation S for life
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| Price talk: | 10½% area
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| Marketing: | Roadshow
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