HC2’s downsized, restructured $470 million three-year notes offering to allocate on Wednesday

By Paul A. Harris

Portland, Ore., Nov. 13 – HC2 Holdings, Inc. provided details on a downsized $470 million offering of senior secured notes on Tuesday, according to an informed source.

The deal, via bookrunner Jefferies LLC, is downsized from $535 million, with $55 million of the proceeds shifted to a concurrent offering of convertible securities, decreasing the overall amount of the capital markets transaction to $525 million from $535 million.

The maturity of the senior secured notes decreased to three years from five years. Call protection decreased to 1.5 years from two years; the initial call premium remains at par plus 50% of the coupon.

The company put in place a redemption feature specifying that proceeds from any sale, transfer or disposition of assets must be applied to fund a call or put of the senior secured notes at 104.5. That premium steps down to par in the final year.

There was no update on price talk which circulated during the Nov. 5 week: 11˝% coupon at 98.75 to yield 12%.

There were also changes to the minimum collateral coverage, minimum liquidity, maximum net leverage and minimum fixed charge coverage covenants.

Moody's Investors Service assigns its Caa1 senior secured rating to HC2. S&P Global Ratings sets HC2's senior secured rating at B-.

Books close at 4 p.m. ET on Tuesday, and both the senior secured notes and the convertibles are set to allocate on Wednesday.

Proceeds from the senior secured notes and convertibles will be used to redeem the company’s outstanding 11% senior secured notes due 2019.

HC2 is a New York-based diversified holding company with four core operating subsidiaries in the construction, marine services, natural gas distribution and telecommunications businesses.

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