Orchard Supply Hardware postpones $235 million eight-year note offering

By Paul A. Harris

St. Louis, Nov. 17 - Orchard Supply Hardware Stores Corp. has abandoned its effort to price a $235 million offering of eight-year senior notes (B2/CCC+) because the interest rate would have been too high, according to an informed source.

The company had expected to price the bonds below 10% and pulled the deal when it appeared that the rate would rise above 11%.

The source added that Sears Holdings Corp. will now take the notes under an existing arrangement with Orchard Supply Hardware in which Sears agreed to loan the money at 10% if Orchard failed to complete the deal at that level.

The San Jose, Calif.-based operator of home improvement stores is a subsidiary of Sears.

Lehman Brothers, Citigroup and JP Morgan were managing the deal.

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