99 Cents Only talks $250 million eight-year notes at 10% area yield

By Paul A. Harris

Portland, Ore., Dec. 13 - 99 Cents Only Stores Inc. talked its $250 million offering of eight-year senior notes (Caa1/CCC+) with a yield in the 10% area on Tuesday, according to an informed source.

The books close at 10:30 a.m. ET on Wednesday, and the deal is set to price thereafter.

RBC Capital Markets Corp. is the left bookrunner. BMO Capital Markets Corp. and Deutsche Bank Securities Inc. are the joint bookrunners.

The Rule 144A and Regulation S with registration rights notes become callable in three years at par plus 75% of the coupon. The notes also feature a three-year 35% equity clawback and a 101% poison put.

Proceeds will help fund the buyout of the company by Ares Management LLC and Canada Pension Plan Investment Board for $22.00 per share in cash with a total equity value of about $1.6 billion.

Other funds for the transaction will come from a $675 million credit facility and about $635.9 million of equity.

The issuing entity is Number Merger Sub, Inc., which will be merged with and into 99 Cents Only Stores, a City of Commerce, Calif.-based operator of extreme value retail stores.

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