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SPX Flow $570 million 8¾% notes coming at big discount to yield 10%-10¼%; pricing Friday
By Paul A. Harris
Portland, Ore., March 18 – Official price talk surfaced Friday on the SPX Flow, Inc. buyout deal, according to market sources.
Talk specifies an 8¾% coupon, with the notes coming at a big discount.
The rich end of the talk is 93.216, which would result in a 10% yield, and the cheap end of talk is 91.933, which would result in a 10¼% yield.
The deal is set to price and allocate before Friday's close.
Official talk comes roughly 100 basis points to 125 bps beyond the wide end of early guidance in the high 8% to 9% area.
A partially syndicated $570 million bridge loan backing the bonds was capped at 8¾%, leaving the dealer and the bridge participants on the hook to cover the discount, sources say.
Along with Friday's price talk came covenant changes, which primarily bear upon how the company may disburse cash and incur additional debt.
BofA Securities Inc. is the left bookrunner. Citigroup Global Markets Inc., BNP Paribas Securities Corp., Deutsche Bank Securities Inc., RBC Capital Markets LLC, Truist Securities Inc. and UBS Securities LLC are joint bookrunners.
The Rule 144A and Regulation S notes become callable after three years at par plus 50% of the coupon. They feature a 40% equity clawback at par plus the full coupon during the non-call period and have a 101% poison put.
The issuing entity will be Redwood Star Merger Sub, Inc., which is to be merged with and into SPX Flow.
Proceeds plus cash on hand, a senior secured credit facility and an equity contribution will be used to support Lone Star Funds’ acquisition of SPX Flow Inc. and refinance existing credit facilities.
Charlotte, N.C.-based SPX Flow supplies highly engineered products and technologies for the HVAC and detection and measurement markets.
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