Harland Clarke 2022 add-on reduced to $450 million; pricing Tuesday

By Paul Deckelman

New York, Oct. 31 – Harland Clarke Holdings Corp.’s planned add-on to its existing 8 3/8% senior secured notes due Aug. 15, 2022 was heard by high-yield syndicate sources to have been downsized to $450 million from an originally announced $500 million.

Potential investors were being asked to reconfirm their orders, with pricing still expected Tuesday morning at a price of 104.75.

The Rule 144A and Regulation S for life deal will come to market via joint bookrunners Credit Suisse Securities (USA) LLC, BofA Merrill Lynch, Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Jefferies LLC, Macquarie Capital and Wells Fargo Securities LLC.

Fifth Third Bank, Regions Securities LLC and Eagle Hill Capital will be the co-managers on the offering.

The add-on tranche will have the same features as the original $350 million deal that priced on Feb. 2, 2017 – it will become callable on Feb. 15, 2019 at 104.188, have a 35% equity clawback at 108.375 until Feb. 15, 2019, and a 101% change-of-control provision.

The Rule 144A tack-on notes will become immediately fungible with the existing Rule 144A notes. The Regulation S tack-on notes will become fungible with the existing Regulation S notes at the conclusion of a 40-day restriction period.

Harland Clarke, a San Antonio-based provider of media delivery, payment solutions and marketing services, plans to use the add-on proceeds, along with the proceeds from the company’s concurrent new term loan financing, to refinance its existing tranche B-5 term loan and tranche B-6 term loan and pay the outstanding borrowings under its ABL facility. The syndicate sources said that some of the proceeds may also now be used to provide cash for the company’s balance sheet.

While the bond deal was being downsized by $50 million, the sources said the new six-year covenant-light first-lien term loan being lined up was being upsized by $100 million to $1.78 billion from $1.68 billion originally.

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