Valvoline talks $375 million eight-year notes to yield 5¾%-6%

By Paul A. Harris

Portland, Ore., July 13 – Valvoline Inc. talked its $375 million offering of eight-year senior notes (Ba3) to yield 5¾% to 6%, a syndicate source said on Wednesday.

Books close at 2:30 p.m. ET on Wednesday, and the Rule 144A and Regulation S with registration rights deal, related to Ashland Inc.’s spinoff of Valvoline, is set to price thereafter.

Citigroup Global Markets Inc. is the left bookrunner. BofA Merrill Lynch, Morgan Stanley & Co. LLC, Scotia Capital, Deutsche Bank Securities Inc., Goldman Sachs & Co. and J.P. Morgan Securities LLC are the joint bookrunners.

PNC Capital Markets and U.S. Bancorp Investments Inc. are the senior co-managers. BB&T, BBVA, Citizens, Fifth Third Securities, KeyBanc Capital Markets, Mizuho Securities, MUFG, SunTrust Robinson Humphrey Inc. and TD Securities are the co-managers.

The notes become callable after three years at par plus 75% of the coupon.

The deal also features special mandatory redemption provisions related to the spinoff and proposed IPO.

There is also a three-year 40% equity clawback, excluding the proposed IPO.

The notes also feature a 101% poison put.

Proceeds will be used to repay Ashland bank debt.

The issuing entity will be Valvoline Finco Two LLC, which will merge with and into Valvoline, a Covington, Ky.-based specialty chemical company.

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