By Paul Deckelman
New York, Oct. 15 - Texas Competitive Electric Holdings Co. LLC and TCEH Finance, Inc. priced an upsized $350 million offering of 101/2-year senior secured second-lien notes (Caa2/CCC/B) at par on Friday to yield 15%, according to high yield syndicate sources.
The issue came to market in line with previously circulated price talk.
The quickly-marketed deal was upsized from the $300 million issue announced on Thursday.
The issuers are both subsidiaries of Energy Future Holdings Corp., the Dallas-based power generation and electric utility company formerly known as TXU Corp.
The bonds came to market via Citigroup Global Markets, Inc., the left-hand bookrunner on the deal; other bookrunners were J.P. Morgan Securities LLC, Goldman Sachs & Co. and Credit Suisse Securities (USA) LLC.
Bank of America Merrill Lynch and Morgan Stanley & Co. Inc. were co-managers.
The bonds were being sold under Rule 144A and Regulation S, with registration rights. They will have five years of call protection, including a provision for a make-whole call at Treasuries plus 50 basis points.
There is also a change-of control put provision at a 101 price.
The bonds are substantially similar, including indenture covenants, to the $335.905 million of 15% senior secured second-lien notes due April 1, 2021, which the company recently issued in connection with a below-par exchange offer, concluded earlier this month, that took out roughly $478 million of its two series of outstanding 10¼% notes due 2015 and its outstanding 10½%/11¼% senior toggle notes due 2016.
In announcing the new deal on Thursday, Texas Competitive said it plans to use the net proceeds from the bond offering to repay borrowings under its senior credit facility and/or to buy back some more of those outstanding 2015 and 2016 bonds.
The new bonds are to be guaranteed by Texas Competitive parent EFCH and by each of its own subsidiaries that guarantees its senior secured credit facility. They will be secured by second-priority liens on substantially all of tangible and intangible assets of Texas Competitive and the subsidiary guarantors of the credit facility.
| Issuers: | Texas Competitive Electric Holdings Co. LLC and TCEH Finance Inc.
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| Amount: | $350 million (upsized from $300 million originally)
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| Maturity: | April 1, 2021
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| Securities: | Senior secured second-lien notes
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| Bookrunners: | Citigroup Global Markets, Inc., J.P. Morgan Securities LLC, Goldman Sachs & Co. and Credit Suisse Securities (USA) LLC.
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| Co-managers: | Bank of America Merrill Lynch and Morgan Stanley & Co. Inc.
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| Coupon: | 15%
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| Price: | Par
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| Yield: | 15%
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| Call features: | Make-whole call at T+ 50 bps until Oct. 1, 2015, then callable at 107.5. Callable on or after Oct. 1, 2016 at 105, callable on or after Oct. 1, 2017 at 102.5, and callable on or after Oct. 1, 2018 at par.
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| Equity clawback: | For 35% of issue at 115 until Oct. 1, 2013
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| Change of control: | Put at 101
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| Trade date: | Oct. 15
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| Settlement date: | Oct. 20
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| Ratings: | Moody's: Caa2
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| Standard & Poor's: CCC
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| Fitch: B
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| Distribution: | Rule 144A with registration rights, Regulation S
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| Price talk: | 15% at par
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| Marketing: | Quick to market
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