Michaels sets Monday investor call for $2.3 billion notes backing buyout by Apollo

By Paul A. Harris

Portland, Ore., April 1 – An investor conference call is scheduled to begin at 10:30 a.m. ET on Monday for a $2.3 billion two-part offering of high-yield notes backing the buyout of the Michaels Cos., Inc. by Apollo, according to a syndicate source.

The Rule 144A and Regulation S for life deal includes a $1 billion tranche of seven-year senior secured notes (existing ratings Ba3/B) callable after 2.5 years at par plus 50% of coupon. A special call provision allows the issuer to redeem 10% of the secured notes annually at 103 during non-call period.

The offering also includes a $1.3 billion tranche of eight-year senior unsecured notes (existing ratings B3/CCC+) callable after three years at par plus 50% of coupon.

Deal timing has management taking calls from investors through April 8.

Joint bookrunner Barclays will bill and deliver. Credit Suisse Securities (USA) LLC, Wells Fargo Securities LLC, Deutsche Bank Securities Inc., RBC Capital Markets LLC, Mizuho Securities USA Inc., BofA Securities Inc., Truist Securities Inc., Citizens Capital Markets Inc., Jefferies LLC, BMO Capital Markets Corp., BNP Paribas Securities Corp. and Goldman Sachs & Co. LLC are also joint bookrunners.

The secured notes are covered by a first priority security interest in substantially all assets other than ABL collateral and a second priority lien on ABL collateral.

Proceeds plus a contemplated $1.8 billion term loan B, $1.4 billion of new equity and approximately $750 million of cash on hand will be used to fund the acquisition of the company by Apollo.

The issuing entity will be Magic MergerCo, Inc., which is to be merged with and into the Michaels Cos., an Irving, Tex.-based specialty provider of arts, crafts, framing, floral, wall decor and seasonal merchandise for Michaels stores and do-it-yourself home decorators.

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