Diamond Resorts talks $425 million eight-year notes at 11¾%-12% yield

By Paul A. Harris

St. Louis, Aug. 9 - Diamond Resorts Corp. talked its $425 million offering of eight-year senior secured notes with an 11¾% to 12% yield on Monday, an informed source said.

The Las Vegas-based timeshare and vacation ownership company also modified the bond covenants.

The order books close at 2:30 p.m. ET on Tuesday, with the deal set to price thereafter.

Credit Suisse Securities, Bank of America Merrill Lynch and Guggenheim Securities are the joint bookrunners for the notes, which are being marketed via Rule 144A and Regulation S, with registration rights.

The notes come with four years of call protection.

The removal of a special call provision, which would have allowed for up to 10% of the issue to be callable annually at 103.0 during the non-call period, was among the covenant changes.

The notes will be secured by the company's vacation ownership inventory, excluding the inventory held in deeded form. In addition the notes will be secured by the equity interests of the material domestic subsidiaries which hold management contracts and by 66% of the equity interests in first-tier foreign subsidiaries.

Proceeds will be used to refinance bank debt.

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