By Paul Deckelman
New York, Aug. 9 - Energy Future Intermediate Holding Co. LLC and EFIH Finance Inc. priced an upsized $850 million two-part junk issue on Thursday, syndicate sources said.
The drive-by offering consisted of $250 million of senior secured first-lien notes due 2017 that priced at par to yield 6 7/8% (Caa3/B-) and a $600 million add-on to the existing 11¾% senior secured second-lien notes due March 1, 2022 (Caa3/CC), which priced at 102.25 for a yield to worst of 11.295%.
The five-year notes priced on the tight side of price talk in the 7% area. Talk on the add-on was in the range of 102 to 102.25.
The add-on tranche was upsized from the originally announced $500 million.
The companies - units of Energy Future Holdings Corp., the Dallas-based utility operator and merchant electric power producer formerly known as TXU Corp. - originally priced $800 million of the 11¾% notes in a quick-to-market deal on Feb. 1. That tranche, massively upsized from an originally shopped $400 million, was priced at 98.535 to yield 12%.
They followed that up barely three weeks later, on Feb. 23, with a quickly shopped $350 million add-on to the 2022s that priced at par to yield 11¾%.
The paper is being sold to qualified institutional buyers under Rule 144A and Regulation S with registration rights.
It was brought to market via joint book-running managers Citigroup Global Markets Inc., Goldman Sachs & Co., Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC.
As was the case with the original issue of the 2022 notes, the proceeds of the new bond deal will be used to pay a dividend to parent Energy Future Holdings, which will in turn use the proceeds to repay a portion of the demand notes payable by it to another of its wholly owned subsidiaries, Texas Competitive Electric Holdings Co. LLC that have arisen from cash loaned by Texas Competitive Electric to Energy Future Holdings.
| Issuers: | Energy Future Intermediate Holding Co. LLC and EFIH Finance Inc.
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| Amount: | $850 million in two parts, increased from an originally announced $750 million
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| Bookrunners: | Citigroup Global Markets Inc., Goldman Sachs & Co., Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC
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| Put option: | At 101 upon a change of control
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| Trade date: | Aug. 9
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| Settlement date: | Aug. 14
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| Distribution: | Rule 144A/Regulation S with registration rights
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| Marketing: | Quick-to-market
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|
|
| Tranche 1
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| Amount : | $250 million
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| Maturity: | Aug. 15, 2017
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| Securities: | Senior secured first-lien notes
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| Coupon: | 6 7/8%
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| Price: | Par
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| Yield: | 6 7/8%
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| Spread: | 614 bps vs. comparable Treasury issue
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| Call protection: | Non-callable except for make-whole call at Treasuries plus 50 bps) until Feb. 15, 2015, then callable at 103.438, callable a year later at 101.719 and finally callable at par on or after Feb. 15, 2017
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| Equity clawback: | For up to 35% of issue at 106.875 prior to Feb. 15, 2015
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| Ratings: | Moody's: Caa3
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| Standard & Poor's: B-
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| Price talk: | 7% area
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|
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| Tranche 2
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| Amount : | $600 million, increased from originally announced $500 million
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| Maturity: | March 1, 2022
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| Securities: | Fungible add-on to existing senior secured second-lien notes
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| Coupon: | 11¾%
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| Price: | 102.25 plus accrued interest from Feb. 6
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| Yield to worst: | 11.295%
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| Spread: | 960 bps vs. comparable Treasury issue
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| Call protection: | Non-callable except for make-whole call at Treasuries plus 50 bps until March 1, 2017, then callable at 105.875, 103.917, 101.958 and finally callable at par on or after March 1, 2020
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| Equity clawback: | For up to 35% of issue at 111.75 prior to March 1, 2015
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| Ratings: | Moody's: Caa3
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| Standard & Poor's: CC
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| Price talk: | 102 to 102.5
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