Wesco PattonAir upsizes notes to $2.18 billion, sets talk on revised three-part deal, pulls loan

By Paul A. Harris

Portland, Ore., Nov. 4 – The Wesco PattonAir $2,175,000,000 acquisition/merger financing resurfaced with revisions and wider guidance, and bereft of a proposed bank loan tranche on Monday, according to market sources.

The revised deal includes an upsized $1.6 billion amount of senior secured notes (B3/B) coming in two tranches with minimum sizes of $500 million apiece. They include five-year notes with two years of call protection, talked to yield 8¼% to 8½%, and seven-year notes with three years of call protection, talked to yield 8¾% to 9%.

The secured portion of the deal increased from $1 billion, which had been offered in a single tranche of seven-year notes that had been in the market with early guidance in the high 7% area.

Proceeds from a proposed $600 million term loan were shifted to the secured notes tranches, and the loan was withdrawn from the market.

In additional revisions, the secured notes will amortize at an annual rate of 1% and feature a 50% excess cash flow sweep.

The size and structure of the $575 million tranche of eight-year senior unsecured notes (Caa2/CCC+), which are non-callable for three years, remains unchanged. However, guidance widened. Official talk has the unsecured notes coming 425 basis points to 450 bps behind the seven-year secured notes, implying a yield in the range of 13% to 13½%. Earlier guidance had the unsecured notes coming 350 bps behind the seven-year secured notes (then talked in the high 7% area) implying a yield in the low-to-mid 11% area.

Books close at noon ET on Wednesday.

BofA Securities Inc. is the left bookrunner for the Rule 144A for life deal. Deutsche Bank Securities Inc., Jefferies LLC, Barclays, BNP Paribas Securities Corp., Goldman Sachs & Co. LLC and HSBC Securities (USA) LLC are the joint bookrunners.

Proceeds will be used to help fund the buyout of Wesco and fund the merger of Wesco with Pattonair USA, Inc., a provider of supply chain management services for the aerospace and defense industries.

Proceeds from the note sale will also be used to repay debt.

The issuing entity will be Wolverine Escrow, LLC, which is to be merged with an into Wesco Aircraft Holdings, Inc.

Wesco is a Valencia, Calif.-based supply chain services provider to the aerospace industry.

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