IHO (Schaeffler) sets tranche sizes, prices in €2.05 billion four-part PIK notes offering

By Paul A. Harris

Portland, Ore., May 22 – IHO Verwaltungs GmbH, the holding company whose interests include manufacturer Schaeffler AG, set tranche sizes and final pricing in its €2.05 billion equivalent four-part offering of senior secured PIK toggle notes (expected Ba1/confirmed BB+/confirmed BB+), according to market sources.

Nearing the close of books Wednesday morning, the details of the Rule 144A and Regulation S deal were as follows:

• €800 million six-year notes with two years of call protection, at 3 5/8% (price talk was in the 3¾% area);

• €500 million eight-year notes with three years of call protection, at 4 1/8% including a discount (price talk was in the 4 1/8% area);

• $450 million eight-year notes with three years of call protection, at 6% (price talk was in the 6% area); and

• $400 million 10-year notes with five years of call protection, at 6 3/8% (price talk was in the 6 3/8% area).

Final terms are expected by noon ET on Wednesday, sources say.

Joint global coordinator Deutsche Bank is the left lead and will bill and deliver for the euro-denominated notes. Joint global coordinator Citigroup Global Markets Inc. is the left lead and will bill and deliver for the dollar-denominated notes.

BofA Securities Inc. and HSBC Securities are the joint bookrunners.

The Herzogenaurach, Germany-based company plans to use the proceeds, together with cash on hand, to fully redeem dollar- and euro-denominated notes due in 2021 and 2023, as well as to repay €150 million under the issuer term facility, and to close out cross-currency hedging arrangements related to certain of the redeemed notes.

The prospective issuer is a holding and finance company underpinned by two investment grade-rated main assets, with a 75.1% stake (representing 100% of the voting rights) in Schaeffler AG and a 36% stake in Continental AG, both global manufacturing companies based in Germany.

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