By Paul A. Harris
St. Louis, Oct. 22 - Sabra Health Care LP and Sabra Capital Corp. priced a $225 million issue of eight-year senior notes (B2/B/) at par to yield 8 1/8% on Friday, according to an informed source.
The yield printed at the tight end of the 8¼% area price talk.
Bank of America Merrill Lynch, Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Wells Fargo Securities LLC were the joint bookrunners. RBC Capital Markets Corp. was the co-manager.
Proceeds will be used to finance the pending spinoff of Sabra Health Care REIT Inc. by its corporate parent, Sun Healthcare Group Inc.
The company said that net proceeds from the bond offering are to be held in escrow. Upon release of that escrow, the proceeds will be used to redeem Sun's existing 9¼% senior subordinated notes' escrow. If the conditions set forth in that agreement are not satisfied or waived by Dec. 31, the notes will then be subject to a mandatory redemption at 100.75, plus accrued interest.
The bonds were issued in connection with the pending spinoff of Sabra, a health care real estate investment trust, from Irving Texas-based Sun Healthcare, which together with its subsidiaries, provides nursing, rehabilitative and related specialty health care services to nursing home patients in the United States.
Under the terms of the company restructuring announced in August, Sun will split into two publicly traded companies - Sun Healthcare, which will be an operating company, and Sabra, which will hold all of Sun's current properties and real estate and operate as a REIT.
| Issuers: | Sabra Health Care LP and Sabra Capital Corp.
|
| Amount: | $225 million
|
| Maturity: | Nov. 1, 2018
|
| Securities: | Senior notes
|
| Bookrunners: | Bank of America Merrill Lynch, Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Wells Fargo Securities LLC
|
| Co-manager: | RBC Capital Markets Corp.
|
| Coupon: | 8 1/8%
|
| Price: | Par
|
| Yield: | 8 1/8%
|
| Spread: | 606 bps
|
| Call protection: | Make-whole call at Treasuries plus 50 bps until Nov. 1, 2014, then callable at a premium
|
| Equity clawback: | 35% at 108.125 until Nov. 1, 2013
|
| Trade date: | Oct. 22
|
| Settlement date: | Oct. 27
|
| Ratings: | Moody's: B2
|
| Standard & Poor's: B
|
| Distribution: | Rule 144A with registration rights
|
| Price talk: | 8¼% area
|
| Marketing: | Roadshow
|
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