Camelot/Cornerstone whispers $600 million notes with 8¾% coupon at a discount to yield 10½%

By Paul A. Harris

Portland, Ore., July 13 – Camelot Return Merger Sub Inc. shopped a $600 million offering of six-year non-call-two senior secured notes (B2/B) backing the buyout of Cornerstone Building Brands, Inc. by Clayton, Dubilier & Rice (CD&R) on Wednesday afternoon, according to market sources.

Initial guidance specifying an 8¾% coupon at a discount to yield 10½% surfaced during that call, they added.

At the same time the bank loan tranche, a $410 million six-year first lien term loan, was talked with a 562.5 basis points spread to SOFR.

The roadshow is set to run through Tuesday, July 19, and the deal is expected to price thereafter.

Deutsche Bank Securities Inc. and UBS Securities LLC are the co-left lead bookrunners.

Barclays, BNP Paribas, RBC Capital Markets Corp., SG Americas Securities LLC, Goldman Sachs & Co. LLC, Natixis and Jefferies & Co. are the joint bookrunners.

Proceeds from the bonds and loan plus $464 million of CD&R-contributed PIK HoldCo debt will be used to fund the purchase of the 51% of shares outstanding by affiliates of CD&R which currently owns approximately 49% of the company.

The buyout has an enterprise value of about $5.8 billion, including the assumption of debt, and is expected to close in the second or third quarter of 2022

Cornerstone is a Cary, N.C.-based manufacturer of exterior building products.

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