By Paul Deckelman
New York, March 22 - ADS Tactical Inc. was heard by high-yield syndicate sources to have priced a $275 million offering of seven-year senior secured notes (B3/B) on Tuesday, after the company and its underwriters agreed to certain changes in the bonds' indenture.
The bonds priced at par to yield 11%, at the wide end of market price talk looking for a yield of between 10¾% and 11%.
The sources heard that the Rule 144A transaction priced after the issuer and underwriters J.P. Morgan Securities LLC, Morgan Stanley & Co. Inc. and Wells Fargo Securities, LLC had agreed to certain covenant changes in order to get the deal done, including the elimination of a special call provision that would have allowed the company to redeem 10% of notes annually at 103 during the four-year non-call period following the bonds' issuance.
"That's gone," said a trader after the deal priced.
Another change was to set the first-call price at par plus three-quarters of the coupon, rather than the usual par plus half the coupon found on most bonds.
The debt carve-out was also reduced by $50 million, among other indenture changes.
The Virginia Beach, Va.-based defense contractor and equipment supplier to police and fire departments plans to use the deal proceeds to repay debt and fund a $223 million shareholder dividend.
| Issuer: | ADS Tactical Inc.
|
| Amount: | $275 million
|
| Maturity | April 1, 2018
|
| Securities: | Senior secured notes
|
| Bookrunners: | J.P. Morgan Securities LLC, Morgan Stanley & Co. Inc. and Wells Fargo Securities, LLC
|
| Coupon: | 11%
|
| Price: | Par
|
| Yield: | 11%
|
| Spread: | 826 bps over reference Treasury issue
|
| Call features: | Non-callable for the first four years after issue, then at 108.25, 104.125, par (special call for 10% annual redemption at 103 dropped)
|
| Trade date: | March 22
|
| Settlement date: | March 28 (T+4)
|
| Existing ratings: | Moody's: B3
|
| Standard & Poor's: B
|
| Distribution: | 144A
|
| Price talk: | 10¾% to 11%
|
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