Banro's $175 million notes price, trade higher; Cascades better; Flint up on deal news

By Cristal Cody

Prospect News, Feb. 24 - Canada's Banro Corp. sold an upsized offering of $175 million of five-year notes/warrants in the U.S. high-yield market on Friday.

"The book was well over two times oversubscribed with real money accounts in it from Canada, the U.S. and Europe," an informed bond source said.

Activity was quiet but the market had a positive tone to the day, sources said.

The Markit CDX Series 17 North American high-grade index firmed 1 basis point to a spread of 96 bps.

In the secondary market, Banro's notes traded higher going out.

Flint Energy Services Ltd.'s bonds rallied as much as 7 points on the week after URS Corp. said it will acquire the Canadian energy company for C$1.2 billion in cash and the assumption of C$225 million of debt.

Tissue product company Cascades Inc.'s 7¾% senior notes due 2016 traded higher over the day on Friday, though they were lower from a week ago, a bond source said.

The company on Thursday reported fourth-quarter revenue rose 17% to C$913 million, while profit was C$5 million, or 5 cents a share, compared to a loss of C$12 million, or 12 cents a share, in the same period a year ago.

Canadian government bonds ended moderately better. The 10-year note yield fell 2 bps to 2.02%. The 30-year bond yield fell 1 bp to 2.63%.

Banro upsizes

After a roadshow that started on Wednesday, Banro priced $175 million of five-year notes/warrants at par to yield 10% in the U.S. high-yield market on Friday, an informed bond source said.

The deal was upsized from $125 million and priced on top of guidance of 10%.

"The company has decided to increase this debt offering by an additional $50 million," Simon Village, president and chief executive of Banro, said in a release. "The proceeds will allow the company to underwrite the construction of our second gold mine, Namoya, and also to work toward the longer term hydro power option for the gold belt."

The issue due March 1, 2017 includes 48 common share purchase warrants per note. Each warrant allows the holder to purchase one common share of the company at $6.65 for five years.

GMP Securities LP and BMO Capital Markets Corp. were the bookrunners.

Proceeds will be used to develop the company's Namoya gold mine project, to repay an existing credit facility and for general corporate purposes.

In the secondary market, the notes rose to 101.5 bid, 102 offered Friday afternoon, a source said.

Banro is a Toronto-based gold mining company.

Flint Energy trades up

Flint Energy's 7½% senior notes due 2019 rose to 108 bid going out on Friday, a trader said.

A week ago, the notes traded at 101.75 bid.

Flint sold C$175 million of the notes due 2019 on May 25, 2011 at 99.

San Francisco-based URS expects to close its acquisition of Flint in the second quarter. Flint Energy shareholders will vote on the takeover on April 3.

Moody's Investors Service has placed Flint Energy's ratings on review for upgrade due to the acquisition.

The Calgary, Alta.-based company provides products and services to the oil and gas industries.

Cascades active

Cascades' 7¾% senior notes due 2016 traded at 102 bid early on Friday and rose going out to 103 bid, a bond source said.

The notes traded at 104.75 bid a week ago, according to a source.

Cascades sold C$250 million of the notes (Ba3/B+/) on Dec. 9, 2009 at 98.293 to yield 8 1/8%.

The Kingsey Falls, Quebec-based company produces and sells packaging and tissue paper products.

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