By Paul Deckelman
New York, June 20 - Sappi Papier Holding GmbH priced a quick-to-market $700 million two-part offering of senior secured notes (Ba2/BB) on Wednesday, high-yield syndicate sources said. The deal was upsized and restructured from an original one-tranche $300 million transaction.
The issuer priced $400 million of 7¾% senior secured notes due 2017 and $300 million of 8 3/8% senior secured notes due 2019, both at par, in line with pre-deal market price talk.
The company - a Gratkorn, Austria-based subsidiary of giant international coated paper and chemical cellulose manufacturer Sappi Ltd., of Johannesburg, South Africa - originally announced plans on Wednesday morning to sell $300 million of the 2017 notes.
Sappi Papier said that it would use the proceeds of that deal, plus cash on hand, to refinance in a separately announced tender offer up to $300 million of its outstanding bonds due 2014.
Sappi Papier's wholly owned PE Paper Escrow GmbH unit had issued $300 million of 12% senior secured notes and €375 million of 11¾% senior secured notes, both due 2014, back in July 2009. Under the terms of the tender offer, the dollar-denominated notes would have a higher acceptance priority than the euro notes.
Around midday, however, market sources heard that a second tranche, for $300 million of secured notes due 2019, had been added to the bond deal and that the size of the tender offer had increased accordingly.
There was more tinkering a little later on in the afternoon, when the size of the original five-year tranche was increased by $100 million, bringing it up to $400 million and enlarging the total size of the two-part deal to $700 million, its final size. That upsizing was also attributed to the company having again increased the size of its tender offer.
Market participants heard price talk on the five-year notes envisioning a yield between 7¾% and 8%, and talk for the seven-year paper of between 8¼% and 8½%. The five-years priced at the tight end of talk, while the seven-years came to market right in the middle of their range.
The five-year notes are non-callable for the life of the issue, other than a make-whole call and a company option to call the bonds at par three months before their scheduled maturity. The seven-year notes have three years of call protection followed by a conventional call structure, with first call at par plus three-quarters of the coupon.
Both tranches have a standard three-year equity clawback provision for up to 35% of the issue, and both have a standard change-of-control put option at 101% of principal plus accrued interest.
The deal was brought to market via joint global coordinating book-running managers J.P. Morgan Securities LLC, Citigroup Global Markets Inc. and RBS Securities Inc.
Credit Agricole Securities (USA) Inc., Standard Chartered Bank and UniCredit Bank served as joint lead managers and bookrunners.
The notes are being sold under Rule 144A and Regulation S, in effect for the life of the securities.
| Issuer: | Sappi Papier Holding GmbH
|
| Issue: | Senior secured notes
|
| Joint global coordinated bookrunners: | J.P. Morgan Securities LLC, Citigroup Global Markets Inc. and RBS Securities Inc.
|
| Joint lead managers and bookrunners: | Credit Agricole Securities (USA) Inc., Standard Chartered Bank and UniCredit Bank
|
| Price: | Par
|
| Put: | Change-of-control put at 101% of principal plus accrued interest
|
| Ratings: | Moody's: Ba2
|
| S&P: | BB
|
| Trade date: | June 20
|
| Settlement date: | July 5 (T+10)
|
| Distribution: | Rule 144A/Regulation S for life
|
| Marketing: | Quick to market
|
|
|
| Tranche 1
|
| Amount: | $400 million (increased from original $300 million)
|
| Maturity: | July 15, 2017
|
| Coupon: | 7¾%
|
| Yield: | 7¾%
|
| Spread: | 702 bps over 0.625% Treasury note due May 31, 2017
|
| Call: | Make whole call at T+50; option to call at par on or after April 15, 2017
|
| Equity Claw: | For up to 35% of issue at 107.75% until July 15, 2015.
|
| Price talk: | 7½% to 8%
|
|
|
| Tranche 2
|
| Amount: | $300 million (added to originally planned one-tranche deal)
|
| Maturity: | June 15, 2019
|
| Coupon: | 8 3/8%
|
| Yield: | 8 3/8%
|
| Spread: | 727 bps over 1.125% Treasury note due May 31, 2019
|
| Call : | Make-whole call at T+50 prior to June 15, 2015, then callable at 106.281%; callable on or after June 15, 2016 at 104.188; on or after June 15, 2017 at 102.094%; finally on or after June 15, 2018 at par.
|
| Equity Claw: | For up to 35% of issue at 108.375% until June 15, 2015.
|
| Price talk: | 8¼% to 8½%
|
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