Warner Music Group to start roadshow Thursday for $1.05 billion of notes in three tranches

By Paul A. Harris

Portland, Ore., July 6 - Warner Music Group Corp. lined up $1.045 billion of high-yield bond financing on Wednesday, according to an informed source.

The three-tranche deal, which begins a roadshow on Thursday, is part of the financing for the acquisition of the company by Access Industries.

Two tranches, one secured and the other unsecured, are offered via special purpose vehicle WMG Acquisition Corp.

WMG Acquisition is offering a $150 million add-on to its 9½% senior secured notes due June 15, 2016 (/BB-/). Those notes become callable on June 15, 2013 at 104.75. They also feature a major transaction call at 104.75 and have a three-year 35% equity clawback at 109.50 until June 15, 2012.

In addition WMG Acquisition is offering a $695 million tranche of senior notes due Oct. 1, 2018 (/B-/). The unsecured notes will become callable on Oct. 1, 2014 at par plus 75% of coupon and will feature a three-year 35% equity clawback.

At the holding company level, WMG Holdings Corp. is offering a $200 million tranche of senior notes due Oct. 1, 2019 (/B-/). The holding company notes will become callable on Oct. 1, 2015 at par plus 50% of the coupon, and they feature a three-year 35% equity clawback.

Credit Suisse Securities (USA) LLC and UBS Investment Bank are the joint bookrunners.

The deal is set to price during the July 11 week.

The notes in all three tranches feature 101% poison puts.

Proceeds will be used to fund the acquisition and to refinance debt.

Warner Music is a New York-based music content company.

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