Tenneco talks upsized $1.9 billion 8% secured notes in 85.5 area to yield 11.643%-11.931%

By Paul A. Harris

Portland, Ore., Aug. 15 – Tenneco Inc. upsized the bond portion of its bridge refinancing to $1.9 billion from $1.75 billion, shifting proceeds from the concurrent term loan, market sources said on Tuesday.

Price talk has the 8% senior secured notes due November 2028 (B1/B/BB-) coming in the 85.5 area, in the middle of the 85 to 86 initial price talk. Yield talk is 11.643% to 11.931%, tight to initial yield guidance that had the notes coming with an all-in yield of 12%.

Books close at noon ET on Tuesday, and the deal is expected to price thereafter.

The Rule 144A and Regulation S notes become subject to their first call at 104 in November 2024.

BofA Securities, Inc. is the left bookrunner. Citigroup Global Markets Inc., Barclays, BNP Paribas Securities Corp., Jefferies LLC, RBC Capital Markets LLC, TD Securities (USA) LLC, Wells Fargo Securities LLC, Deutsche Bank Securities Inc., BMO Capital Markets Corp., Credit Suisse Securities (USA) LLC, Goldman Sachs & Co. LLC and ING Financial Markets LLC are the joint bookrunners.

With the upsize of the notes the concurrent term loan was downsized to $1.243 billion from $1.393 billion. The loan is in the market on the same timeline as the bonds, with recommitments due at noon ET on Tuesday.

Proceeds from the notes and loan plus cash on hand will be used to repay the bridge loan backing the buyout of Tenneco by Apollo, that was completed late last November. The bridge became hung up on dealer balance sheets due to market conditions late last year.

At that time, Pegasus Merger Co. and Tenneco Inc. were marketing $1 billion of six-year senior secured notes and a $1.4 billion six-year term loan B, which were eventually pulled from the market.

Tenneco was acquired in a transaction with an enterprise valuation of about $7.1 billion, including debt.

Tenneco is a Lake Forest, Ill.-based supplier of automotive products for original equipment and aftermarket customers.

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