Novolex/Clydesdale starts roadshow for $1.98 billion sustainability-linked notes offering

By Paul A. Harris

Portland, Ore., March 28 – Novolex Holdings LLC started a roadshow on Monday for a $1.98 billion two-part offering of sustainability-linked notes in support of the buyout of the company by Apollo, according to market sources.

The deal includes $750 million of seven-year senior secured notes (expected ratings B2/B). Initial guidance has the secured notes coming to yield in the low 7% area with an expected original issue discount. Pre-marketing indications had the secured notes coming with a 6¾% coupon at 97.5 to yield in the low 7% area.

The deal also includes $1.23 billion of eight-year senior notes (expected ratings Caa2/CCC+). Initial guidance on the unsecured notes has them pricing 250 basis points to 290 bps behind the secured notes, also with an expected original issue discount. Pre-marketing indications had the unsecured notes coming with an 8¾% coupon at 96 to yield in the mid-9% area.

Prior to being officially announced to the market on Monday, reverse inquiry in the secured notes exceeded the size of the tranche, according to a sellside source, who added that half of the unsecured notes had also been spoken for by means of reverse inquiry.

The Rule 144A and Regulation S for life deal, which was set to kick off on a Monday conference call with investors, is expected to price later in the March 28 week.

Left lead bookrunner Morgan Stanley & Co. LLC will bill and deliver. Credit Suisse Securities (USA) LLC, Goldman Sachs & Co. LLC, Barclays, Deutsche Bank Securities Inc., RBC Capital Markets LLC, Wells Fargo Securities LLC, BNP Paribas Securities Corp., MUFG, HSBC Securities (USA) Inc., BMO Capital Markets Corp., Mizuho Securities USA Inc. and Macquarie Capital (USA) Inc. are the joint bookrunners.

The notes in both tranches become callable after three years at par plus 50% of the respective coupons.

Proceeds plus a $2.63 billion term loan will be used to help fund the buyout of the company by Apollo Global Management from Carlyle. Carlyle will retain a minority stake in the company.

The issuing entity will be Clydesdale Acquisition Holdings Inc.

Novolex is a Hartsville, S.C.-based manufacturer of packaging products for the foodservice, delivery and carryout, food processor and industrial markets.

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