By Paul A. Harris
Portland, Ore., Oct. 1 – Domtar Corp. priced a $775 million issue of seven-year senior secured notes (Ba2/BB+/BB+) at par to yield 6¾% on Friday, according to market sources.
The yield printed at the tight end of the 6¾% to 7% yield talk but slightly 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 were heard to be two-times deal-size at midday on Friday, a trader said.
Barclays was the left bookrunner. Joint bookrunners were BMO Capital Markets Corp., Credit Suisse Securities (USA) LLC and Wells Fargo Securities LLC.
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.
| Issuer: | Domtar Corp.
|
| Amount: | $775 million
|
| Maturity: | Oct. 1, 2028
|
| Securities: | Senior secured notes
|
| Left bookrunner: | Barclays
|
| Joint bookrunners: | BMO Capital Markets Corp., Credit Suisse Securities (USA) LLC and Wells Fargo Securities LLC
|
| Coupon: | 6¾%
|
| Price: | Par
|
| Yield: | 6¾%
|
| Spread: | 548 bps
|
| First call: | Oct. 1, 2024 at 103.375
|
| Special call: | 10% of notes annually at 103 during non-call period
|
| Trade date: | Oct. 1
|
| Settlement date: | Oct. 18
|
| Ratings: | Moody's: Ba2
|
| S&P: BB+
|
| Fitch: BB+
|
| Distribution: | Rule 144A and Regulation S for life
|
| Price talk: | 6¾% to 7%
|
| Marketing: | Roadshow
|
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