Quality Distribution $225 million notes talked at 9¾%, pricing Monday

By Paul Deckelman

New York, Oct. 29 - Quality Distribution, LLC and QD Capital Corp.'s planned $225 million offering of eight-year second-priority senior secured notes is expected to produce a yield in the 9¾% area, junk market syndicate sources said on Friday.

They said that the order books on the deal will be closed on Monday, with pricing expected later that same session.

The notes will come to market via joint bookrunners Credit Suisse Securities (USA) LLC, Bank of America Merrill Lynch, RBC Capital Markets Corp. and Jefferies & Co. Inc.

They were being shopped around to potential investors via a short roadshow that began mid-week.

The Rule 144A and Regulation S deal (B-), which is being sold with registration rights, will carry four years of call protection, although a special call provision lets the issuer call 10% of the notes at 103 during the non-call period.

The issuers are subsidiaries of Quality Distribution, Inc., a Tampa, Fla.-based provider of bulk transportation and related services.

Quality Distribution plans to use the proceeds from the bond sale to redeem all of its outstanding 10% senior notes due 2013, its 9% senior subordinated notes due 2010 and its senior floating-rate notes due 2012, all of which may be redeemed at par plus accrued interest.

Proceeds will also be used to redeem at par plus accrued interest enough of the 11¾% senior subordinated payment-in-kind notes due 2013 to reduce the balance to $35 million.

The balance of the proceeds would be used to pay down the company's ABL facility.

-Paul Harris contributed to this report

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