By Paul Deckelman
New York, Feb. 18 – Standard Industries, Inc. priced an upsized $1 billion of split-rated (Ba2/BBB-) five-year and seven-year senior notes on Thursday, high-yield syndicate sources said.
The issue was upsized from the originally planned $650 million and the offering was restructured to add the tranche of seven-year paper to the original single tranche of five-year notes.
The final offering was evenly split into two tranches of $500 million each.
The five-year notes priced at par to yield 5 1/8%, tight to price talk which had envisioned a yield of 5¼%.
The seven-year notes priced at par to yield 5½%, in line with expectations.
The quickly shopped deal was marketed to potential investors via a mid-morning conference call and priced just hours after it had surfaced. It priced too late for any same-day aftermarket activity, traders said.
The offering was brought to market via joint global coordinators Bank of American Merrill Lynch, which is handling billing and delivery, and Deutsche Bank Securities Inc.
Citigroup Global Markets Inc. and Goldman Sachs & Co. were joint bookrunners.
The Rule 144A for life/Regulation S offering includes call protection for the first two years of issue for the five-year notes and for the first three years for the seven-year notes, other than via a make-whole call for each at 50 basis points over Treasuries.
There is also an equity clawback provision allowing the company to buy back up to 40% of the paper for the first two years of issue of the five-year notes and the first three years for the seven year notes, and a change-of-control provision for both tranches allowing investors to put the bonds back to the issuer at 101% upon a triggering event.
Issuer Standard Industries is a Parsippany, N.J.-based manufacturer and marketer of a broad line of asphalt and polymer-based roofing products, insulation products, and accessories for the residential and commercial roofing markets. It was formerly known as Building Materials Corp. of America until its official name change, which was announced on Jan. 25.
That announcement came concurrently with the announcement that the company’s GAF Materials Corp. division – which Standard says is North America’s largest roofing manufacturer – had agreed to acquire Herlev, Denmark-based Icopal, a leading European manufacturer of roofing and other waterproofing products, from Investcorp Ltd. for approximately €1 billion.
Proceeds from the new bond deal will be part of the acquisition funding for the Icopal purchase, which is expected to close during the second quarter.
Both tranches of bonds are additionally subject to a special mandatory redemption at par plus accrued interest in the event that the Icopal acquisition is not completed by June 24, or if the stock purchase agreement underlying the acquisition is terminated any time before that.
| Issuer: | Standard Industries, Inc.
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| Amount: | $1 billion (upsized from original $650 million)
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| Securities: | Senior notes
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| Joint Global Coordinators: | Bank of American Merrill Lynch (billing and delivery) and Deutsche Bank Securities Inc.
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| Joint bookrunners: | Citigroup Global Markets Inc. and Goldman Sachs & Co.
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| Change of control: | 101% put
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| Special mandatory redemption: | At par plus accrued interest if Icopal acquisition is not completed by June 24 or if the underlying stock purchase agreement is terminated before that
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| Trade date: | Feb. 18
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| Settlement: | Feb. 23 (T+3)
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| Ratings: | Moody’s: Ba2
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| S&P: BBB-
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| Distribution: | Rule 144A for life/Regulation S
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| Marketing: | Quick to market
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| Five-year notes
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| Amount: | $500 million
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| Maturity: | Feb. 15, 2021
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| Coupon: | 5 1/8%
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| Price: | Par
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| Yield: | 5 1/8%
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| Spread: | 388 bps over 1.375% Treasury due Jan. 31, 2021
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| Call protection: | Make-whole call at Treasuries plus 50 bps until Feb. 15, 2018, then callable at 102.563, 101.281, declining to par on Feb. 15, 2020
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| Equity claw: | Until Feb. 15, 2018 for up to 40% of issue at 105.125
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| Price talk: | 5¼%
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| Seven-year notes
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| Amount: | $500 million
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| Maturity: | Feb. 15, 2023
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| Coupon: | 5½%
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| Price: | Par
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| Yield: | 5½%
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| Spread: | 399 bps over 1.75% Treasury due Jan. 31, 2023
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| Call protection: | Make-whole call at Treasuries plus 50 bps until Feb. 15, 2019, then callable at 102.75, 101.375, declining to par on Feb. 15, 2021
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| Equity claw: | Until Feb. 15, 2019 for up to 40% of issue at 105.5
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| Price talk: | 5½%
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