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Domtar talks $775 million seven-year secured notes to yield 6¾%-7%; pricing Friday
By Paul A. Harris
Portland, Ore., Oct. 1 – Domtar Corp. talked its $775 million offering of seven-year senior secured notes (Ba2/BB+/BB+) to yield 6¾% to 7%, according to a market source.
Official talk came wide to initial guidance in the mid-6% area.
The deal also underwent covenant changes, which primarily bear upon how the company may disburse cash and incur additional debt.
Books close at noon ET on Friday, and the deal is set to price thereafter.
Barclays is the left bookrunner. BMO Capital Markets Corp., Credit Suisse Securities (USA) LLC and Wells Fargo Securities LLC are the joint bookrunners.
The Rule 144A for life notes come with three years of call protection. A special call provision will enable the issuer to redeem 10% of the notes annually at 103 during the non-call period.
Proceeds plus a new $775 million term loan will be used to fund the acquisition of Domtar by Paper Excellence and to fund a potential redemption of Domtar’s existing senior notes.
Domtar is a Fort Mill, S.C.-based provider of fiber-based products.
Paper Excellence is a British Columbia-based pulp and paper manufacturer.
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