By Paul A. Harris
Portland, Ore., Aug. 17 – Diamond Resorts International, Inc. priced its upsized $1.1 billion two-part offering of high-yield notes on Wednesday, a syndicate source said.
The deal included an upsized $500 million amount of seven-year senior secured notes (B1/B+) that priced at par to yield 7¾%. The secured notes tranche was increased from $400 million. The yield printed on top of yield talk.
In addition Diamond Resorts International priced $600 million of 10¾% eight-year senior unsecured notes (Caa1/CCC+) at 98.691 to yield 11%. The yield printed 12.5 basis points beyond the wide end of yield talk in the 10¾% area.
The deal was upsized to $1.1 billion from $1 billion after having previously been upsized from $600 million, with the addition of the $400 million senior secured notes tranche last week.
The late additional $100 million upsize represented a further decrease in the amount of the concurrent term loan to $700 million from $800 million. That decrease followed the previous downsize to $800 million from $1.2 billion, which came when proceeds were shifted to the secured notes tranche from the loan last week.
Along with Thursday’s upsize of the bond deal came covenant changes, including changes to the secured leverage-, EBITDA definition- and unlimited ratio restricted payments covenants, the source said.
In addition debt baskets were tightened, language dealing with transactions with affiliates was tightened, and the asset sale threshold was reduced.
RBC Capital Markets was the left bookrunner. Barclays and Jefferies LLC were the joint bookrunners.
Proceeds will be used to fund the leveraged buyout of the company by Apollo Global Management LLC and to refinance certain existing Diamond Resorts International debt.
The unsecured notes offering ran an Aug. 1 to Aug. 4 roadshow and was subsequently delayed when the company elected to restate earnings.
Prior to the merger, the issuing entity will be Dakota Merger Sub, Inc. Following the merger, the issuer will be Diamond Resorts International, which is a Las Vegas-based hospitality and vacation ownership company.
| Issuer: | Dakota Merger Sub, Inc. prior to the merger, then Diamond Resorts, Inc.
|
| Amount: | $1.1 billion
|
| Left bookrunner: | RBC Capital Markets
|
| Joint bookrunners: | Barclays, Jefferies LLC
|
| Co-managers: | Natixis, Apollo
|
| Trade date: | Aug. 17
|
| Settlement date: | Aug. 31
|
| Distribution: | Rule 144A and Regulation S for life
|
| Marketing: | Roadshow
|
|
|
| Senior secured notes
|
| Amount: | $500 million
|
| Maturity: | Sept. 1, 2023
|
| Coupon: | 7¾%
|
| Price: | Par
|
| Yield: | 7¾%
|
| Spread: | 632 bps
|
| Call: | Make-whole call at Treasuries plus 50 bps until Sept. 1, 2019, then callable at 105.813
|
| Equity clawback: | 40% at 107.75 until Sept. 1, 2019
|
| Ratings: | Moody’s: B1
|
| S&P: B+
|
| Price talk: | 7¾% area
|
|
|
| Senior unsecured notes
|
| Face amount: | $600 million
|
| Proceeds: | $592,146,000
|
| Maturity: | Sept. 1, 2024
|
| Coupon: | 10¾%
|
| Price: | 98.691
|
| Yield: | 11%
|
| Spread: | 951 bps
|
| Call: | Make-whole call at Treasuries plus 50 bps until Sept. 1, 2019, then callable at 108.063
|
| Equity clawback: | 40% at 110.75 until Sept. 1, 2019
|
| Ratings: | Moody’s: Caa1
|
| S&P: CCC+
|
| Price talk: | 10¾% area
|
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