Essar Steel extensively restructures $450 million notes offering, sets talk and timing

By Paul A. Harris

Portland, Ore., May 6 - Essar Steel Minnesota LLC restructured its $450 million offering of senior secured notes (Caa1/CCC+/), a syndicate source said on Tuesday.

The maturity of the bonds decreased to six years from seven year.

Call protection now covers the entire life of the bond, increased from four years.

There are also covenant changes.

Price talk sets out an 11½% coupon at approximately 2 points of original issue discount to yield 12%.

Books close at 10:30 a.m. ET on Wednesday.

Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. LLC and Jefferies & Co. are joint bookrunners for the Rule 144A and Regulation S offering.

The iron ore producer in northern Minnesota, part of India-based Essar Group, plans to use the proceeds to complete construction on its facility and begin commercial operations.

The original issue discount and extra interest reserve will be funded by new equity.

Also, additional equity will be used for the project reserve escrow account.

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