Morning Commentary: Acrisure, Windstream bonds on tap; primary supply tops $5.5 billion for week

By Paul Deckelman

New York, Nov. 3 – High-yield primary market participants were looking for a pair of pricings off the forward calendar on Friday to close out the October-to-November crossover week.

Some $5.77 billion of new U.S dollar-denominated and fully junk-rated paper from domestic or industrialized-country borrowers had priced in 11 tranches by Thursday night’s close, according to data compiled by Prospect News, running slightly behind the $6.01 billion which got done in nine tranches last week.

Acrisure talk 7% to 7¼%

Syndicate sources said early Friday that Acrisure LLC and Acrisure Finance, Inc. are expected to price their planned offering of $725 million of senior notes due 2025 (Caa2/CCC+) to yield 7% to 7¼%.

Pricing on the Rule 144A and Regulation S deal is expected to take place during Friday’s session.

The issue is being brought to market via J.P. Morgan Securities LLC. The roadshow marketing the deal to prospective investors began on Monday.

The notes will come with three years of call protection.

Caledonia, Mich.-based insurance brokerage Arcrisure – the 14th largest brokerage based in the United States in terms of revenues in 2016, according to the company announcement – plans to use the proceeds from the bond deal to replace all of its existing second-lien notes, to pay related fees and expenses and to fund acquisitions.

The company is also repricing and increasing the size of its existing first-lien term loan facility, having launched a $325 million add-on first-lien term loan and a repricing of its existing $1.846 billion first-lien loan at a bank meeting last Thursday. JPMorgan is the lead bank on that deal.

Market waits for Windstream

The junk market sources were meantime awaiting pricing on Windstream Holdings Inc.’s planned $250 million of add-on 8 5/8% senior first-lien notes due Oct. 31, 2025.

The Little Rock, Ark.-based telecommunications services provider announced the issue on Thursday, with pricing expected either later Thursday or on Friday.

The sources said that the Rule 144A and Regulation S for life transaction is being brought to market via left lead bookrunner Citigroup Global Markets Inc., with BNP Paribas Securities Corp., SunTrust Robinson Humphrey Inc., BofA Merrill Lynch, MUFG and JPMorgan also acting as bookrunners.

The company said in a regulatory filing that the new notes will be issued as additional notes under an indenture covering the issue of 8 5/8% senior first-lien notes due 2025 which Windstream expects to be issued under the terms of an exchange offer that the company made to the holders of its existing 2020 and 2021 notes, and all such 8 5/8% notes will be treated as a single class. The new notes will be fungible with the notes being issued as part of the exchange offer if they are issued within 13 days of the issuance date of exchange offer notes.

The notes will have the same guarantors and security as the company’s existing senior secured credit facility.

They will be non-callable for the first three years after issue, other than via a make-whole call at 50 basis points over the Treasuries rate, and will first become callable Oct. 31, 2020 at 106.469. The notes will also have a three-year equity clawback provision for up to 35% of the issue and 101% change-of-control put provision.

Windstream plans to use the add-on deal proceeds to pay revolving credit facility debt.

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