McAfee talks downsized $2.02 billion eight-year notes at 7 3/8% area; pricing Thursday

By Paul A. Harris

Portland, Ore., Feb. 3 – Condor Merger Sub, Inc. talked its downsized $2.02 billion of eight-year senior notes (Caa2/CCC+) to yield in the 7 3/8% area, according to market sources.

Official talk comes slightly wide to initial guidance in the low-7% area.

The bond portion of the deal backing the buyout of McAfee Corp. underwent its second reduction in size in as many days when the unsecured tranche was decreased from $2.32 billion on Thursday.

Earlier in the week the prospective issuer withdrew from the market a proposed $1 billion offering of seven-year senior secured notes.

Books for the unsecured notes close at 2 p.m. ET on Thursday, and the deal is set to price thereafter.

BofA Securities Inc. is the left bookrunner. Additional bookrunners are Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC, Barclays, Citigroup Global Markets Inc., HSBC Securities (USA) Inc., RBC Capital Markets LLC, UBS Securities LLC, BMO Capital Markets Corp., KKR Capital Markets LLC, Macquarie Capital (USA) Inc., Mizuho Securities USA Inc., MUFG, Nomura Securities International Inc., Wells Fargo Securities LLC, BNP Paribas Securities Corp., CIBC World Markets Corp., Citizens Capital Markets LLC, Credit Agricole CIB, Fifth Third Securities Inc., IMI, KeyBanc Capital Markets Inc., Natixis Securities Americas LLC, Scotia Capital (USA) Inc., SG Americas Securities LLC, SMBC Nikko Securities America Inc., Standard Chartered Bank, Stifel Nicolaus & Co. Inc. and TD Securities (USA) LLC.

The notes become callable after three years at par plus 50% of the coupon. They feature a 40% equity clawback at par plus the full coupons during the non-call period. They also feature a 101% poison put.

The issuing entity, Condor Merger Sub, will be merged with and into McAfee upon completion of the buyout.

The $1.3 billion of proceeds, representing the total decrease from the initially planned amount of notes issuance, was shifted to a concurrent bank loan, which increased to $6.96 billion equivalent from $5.66 billion equivalent. The loan is being syndicated in dollar- and euro-denominated tranches.

Proceeds from the unsecured notes and term loans plus a preferred stock offering and equity contributions from investors will be used to fund the acquisition of McAfee by an investor group led by Advent International Corp., Permira Advisers LLC, Crosspoint Capital Partners, Canada Pension Plan Investment Board, GIC Private Ltd. and Abu Dhabi Investment Authority, expected to close in first half of 2022.

Proceeds will also be used to repay substantially all debt of the company and its subsidiaries, and for general corporate purposes.

McAfee is a San Jose, Calif.-based provider of online protection for consumers.

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