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McGraw-Hill downsizes notes offering to $1.68 billion, sets talk; books close Wednesday
By Paul A. Harris
Portland, Ore., July 20 – McGraw-Hill Education, Inc. shifted $350 million to the term loan from the bond portion of the debt financing backing the buyout of the company by Platinum Equity Partners, sources said on Tuesday.
The two-part bond deal, downsized to $1.675 billion from $2.025 billion, saw pricing on both tranches widen from initial guidance.
However, the unsecured tranche underwent a greater amount of widening than the secured notes.
The downsized $950 million tranche (from $1.15 billion) of seven-year senior secured notes (B2/B) is talked to yield in the 5½% area, versus earlier guidance in the low 5% area.
A downsized $725 million tranche (from $875 million) of eight-year senior unsecured notes (Caa2CCC) is talked to yield in the 7¾% area, versus earlier guidance in the low 7% area.
Books close at 12:30 p.m. ET on Wednesday.
The notes in both tranches are covered by three years of call protection, with initial call premiums to be set at par plus 50% of the respective coupons.
The secured notes, but not the unsecured notes, have a special call allowing the issuer to redeem 10% of the notes annually at 103 during the non-call period.
The notes in both tranches feature three-year 40% equity clawbacks, and 101% poison puts.
BofA Securities, Inc. is the left bookrunner. BMO Capital Markets Corp., Macquarie Capital (USA) Inc., BNP Paribas Securities Corp., Deutsche Bank Securities Inc., PNC Capital Markets LLC and UBS Securities LLC are the joint bookrunners.
The initial issuing entity will be MAV Acquisition Corp. Following the completion of the acquisition, the issuer will be McGraw-Hill Education.
Proceeds will be used to fund the acquisition of the New York-based publisher of educational resources and textbooks by Platinum Equity Advisors.
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