Leviathan-Delek sets talk in $2.25 billion four-part bullet offering; pricing expected Monday

By Paul A. Harris

Portland, Ore., July 29 – Leviathan Bond Ltd. set initial price talk in its $2.25 billion four-part offering of senior secured bullet notes (Ba3/BB-/BB), according to a market source.

The deal is coming in tranches of three-year notes with initial talk in the 5 7/8% area, five-year notes with initial talk in the 6 3/8% area, seven-year notes with initial talk in the 6¾% area and 10-year notes with initial talk in the 7¼% area.

Minimum tranche sizes of $500 million are expected.

In accordance with Israeli securities regulations, the deal will remain in the market for seven days, according to the source, who added that pricing is expected on Monday.

High-yield accounts are taking an interest in the deal, according to market sources in Europe and the United States.

JPMorgan is the lead left bookrunner. HSBC, BNP Paribas and Goldman Sachs are the joint bookrunners.

The issuer is a special purpose vehicle for a natural gas production field off of Israel's Mediterranean coast. The project is owned by Delek Group and Ratio Oil Exploration Co., both of Israel, and Houston-based Noble Energy, Inc. (on July 20 Chevron Corp. announced it would acquire Noble in an all-stock transaction valued at $5 billion).

The notes are secured by Delek Drilling LP’s 45.34% working interest in the Leviathan project.

Proceeds will be used to repay a Leviathan capital expenditures facility, as well as the Delek Drilling term loan, also to fund a debt payment fund required balance and for general corporate purposes.

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