Schaeffler to price €2.5 billion equivalent six-part secured PIK toggle notes on Thursday

By Paul A. Harris

Portland, Ore., Sept. 7 – IHO Verwaltungs GmbH announced a €2.5 billion equivalent six-part offering of senior secured PIK toggle notes on Thursday, according to a syndicate source.

A U.S. investor call is scheduled to take place at noon ET on Wednesday. A European investor call was scheduled to take place earlier on Wednesday.

The entire Rule 144A and Regulation S offering is coming in dollar-denominated and euro-denominated tranches.

The deal includes five-year notes, which come with two years of call protection and a two-year 40% equity clawback, seven-year notes, which come with three years of call protection and a three-year 40% equity clawback, and 10-year notes, which come with five years of call protection and a five-year 40% equity clawback.

Tranche sizes remain to be determined.

Early guidance on the dollar-denominated notes has the five-year notes coming with a 4½% yield, the seven-year notes with a 5% yield and the 10-year notes with a 5¼% yield.

Citigroup will bill and deliver for the dollar-denominated notes. Deutsche Bank will bill and deliver for the euro-denominated notes.

BofA Merrill Lynch and HSBC are bookrunners.

Pending registration, the company is currently named Schaeffler Verwaltung Zwei GmbH.

The Herzogenaurach, Germany-based supplier of automotive and industrial components plans to use the proceeds to repay IHO Holding bonds, including the make-whole premium, and partially prepay the Schaeffler AG loan note.

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