Diamond Resorts sets talk in $1 billion two-part notes offering; books close Tuesday

By Paul A. Harris

Portland, Ore., Aug. 15 – Diamond Resorts International, Inc. set price talk in its upsized $1 billion offering of high-yield notes on Monday, according to a syndicate source.

The deal includes $400 million of seven-year senior secured notes (B1/B+) talked to yield in the 7¾% area.

In addition the company is selling $600 million of eight-year senior unsecured notes (Caa1/CCC+) talked to yield in the 10¾% area.

Books are scheduled to close at noon ET on Tuesday.

The deal was upsized to $1 billion from $600 million with the addition of the $400 million senior secured notes tranche last week.

At the same time the company downsized its concurrent term loan to $800 million from $1.2 billion.

The secured notes will rank pari passu with the term loan.

RBC Capital Markets is the left bookrunner. Barclays and Jefferies LLC are the joint bookrunners. Natixis and Apollo are the co-managers.

The notes in both tranches come with three years of call protection.

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.

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