Sally Beauty driving by with $600 million eight-year senior notes; initial talk low-7% area

By Paul A. Harris

Portland, Ore., Feb. 12 – Sally Beauty Supply LLC plans to place a $600 million public offering of Sally Holdings LLC and Sally Capital Inc. senior notes due March 1, 2032 (Ba2/BB-) in a Monday drive-by, according to market sources.

The deal is in the market with initial guidance in the low-7% area, according to a bond trader, who added that there is $250 million of reverse inquiry in the deal.

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 coupon during the non-call period and have a 101% poison put.

Sally Beauty Holdings, Inc. and Sally Investment Holdings LLC will guarantee the notes.

BofA Securities Inc., J.P. Morgan Securities LLC and Truist Securities Inc. are the joint bookrunners.

Citizens Capital Markets Inc., Regions Securities LLC and U.S. Bancorp Investments Inc. are the co-managers.

Computershare Trust Co., NA is the trustee.

Counsel to the issuer is provided by Alston & Bird LLP and to the underwriters by Freshfields Bruckhaus Deringer US LLP.

The Denton, Tex.-based specialty retailer plans to use the proceeds to redeem all of its 5 5/8% senior notes due 2025 that remain outstanding.

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