Borden Chemical to price $250 million in two parts on Friday to fund Bakelite acquisition

By Paul A. Harris

St. Louis, May 9 - Borden U.S. Finance Corp./Borden Nova Scotia (Borden Chemical Inc.) began a roadshow Monday for a $250 million offering of high-yield bonds in two parts (existing ratings B3/B-), according to a syndicate source.

Pricing is expected on Friday.

Credit Suisse First Boston, JP Morgan and Morgan Stanley are joint bookrunners for the Rule 144A/Regulation S with registration rights offering.

The Columbus, Ohio-based chemical company plans to sell fixed-rate and floating-rate notes with terms and indentures that are identical to issues that it priced on Aug. 4, 2004. However upon the completion of the pending merger of Borden with the Resolution companies the new notes will trade under new Cusip numbers, different from those of the existing issues.

Hence the new deal is not a conventional add-on, the source said.

The company is selling second-priority senior secured floating-rate notes due July 15, 2010, callable after July 15, 2006 at 102, and second-priority senior secured notes due July 15, 2014, callable after July 15, 2009 at 104.5, with an equity clawback until July 15, 2007 for 35% at 109.0.

The company priced $150 million of the floating-rate notes at par and $325 million of the fixed-rate notes at par, both on Aug. 4, 2004.

Proceeds from the pending bond sale will be used to fund the acquisition of Bakelite AG.

Upon completion of the merger of Borden Chemical, including Bakelite, and the Resolution companies into Hexion Specialty Chemicals, the proceeds of the pending bond sale will be held in escrow.

Borden Chemical is a producer of binding and bonding resins, performance adhesives, and the building-block chemical formaldehyde for various wood and industrial markets.

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