By Paul A. Harris
Portland, Ore., Aug. 15 – Tenneco Inc. priced an upsized $1.9 billion issue of 8% senior secured notes due Nov. 17, 2028 (B1/B) at 85 to yield 11.933% on Tuesday, according to market sources.
The notes broke sharply lower in the secondary market where they were seen at 83 1/8 bid, 83 7/8 offered, a high-yield portfolio manager said.
The issue size increased from $1.75 billion with the shift of proceeds from the concurrent term loan.
The issue price came at the cheap end of price talk in the 85.5 area. Initial price guidance was 85 to 86.
The yield printed slightly beyond the wide end of the 11.643% to 11.931% yield talk. Initial yield talk was 12%.
BofA Securities, Inc. was the left bookrunner. Joint bookrunners were 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.
With the upsizing of the notes, the concurrent term loan was downsized to $1.243 billion from $1.393 billion.
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, 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.
| Issuer: | Tenneco Inc.
|
| Amount: | $1.9 billion, increased from $1.75 billion
|
| Issue: | Senior secured notes
|
| Maturity: | Nov. 17, 2028
|
| Left bookrunner: | BofA Securities, Inc.
|
| Joint bookrunners: | 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
|
| Coupon: | 8%
|
| Price: | 85
|
| Yield: | 11.933%
|
| Spread: | 761 bps
|
| First call: | Nov. 17, 2024 at 104
|
| Trade date: | Aug. 15
|
| Settlement date: | Aug. 18
|
| Ratings: | Moody’s: B1
|
| S&P: B
|
| Distribution: | Rule 144A and Regulation S
|
| Price talk: | 85.5 area to yield 11.643%-11.931%
|
| Marketing: | Roadshow
|
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