New Issue: Hawaiian Telcom prices downsized $500 million three-part deal

By Paul A. Harris

St. Louis, April 27 - Hawaiian Telcom Communications Inc. priced a downsized $500 million transaction involving three tranches of high-yield bonds on Wednesday, according to a syndicate source.

The company sold $200 million of eight-year senior fixed-rate notes (B3/B-) at par to yield 9¾%. The notes priced on top of price talk that had been revised upward from 9% to 9¼%.

Meanwhile the company sold $150 million of eight-year senior floating-rate notes (B3/B-) at par to yield six-month Libor plus 550 basis points, again on top of price talk that had been revised upward from 475 to 500 basis points.

In addition Hawaiian Telcom Communications sold $150 million of 10-year senior subordinated fixed-rate notes (Caa1/B-) at par to yield 12½%. The subordinated notes priced at the wide end of the 12¼% to 12½% price talk, which had been revised upward from the initial talk of 150 basis points behind the senior fixed-rate notes.

Goldman Sachs had the physical books for the Rule 144A/Regulation S with registration rights offering. JP Morgan and Lehman Brothers were joint bookrunners. The co-managers were ABN Amro and Wachovia Securities.

Proceeds will be used to help fund the Carlyle Group's $1.65 billion acquisition of Verizon Hawaii from Verizon Communications Inc.

Issuer:	Hawaiian Telcom Communications Inc.
Amount:	$500 million (decreased from $550 million)
Bookrunners:	Goldman Sachs (physical books), JP Morgan, Lehman Brothers (joint books)
Co-managers:	ABN Amro, Wachovia Securities
Trade date:	April 27
Settlement date:	May 2
Senior fixed-rate notes
Amount:	$200 million
Maturity:	May 1, 2013
Coupon:	9¾%
Price:	Par
Yield:	9¾%
Spread:	572 basis points
Call features:	Callable after May 1, 2009 at 104.875, 102.438, par on an after May 1, 2011
Equity clawback:	Until May 1, 2008 for 35% at 109.75
Ratings:	Moody's: B3
	Standard & Poor's: B-
Price talk:	9¾% (revised from 9%-9¼%)
Senior floating-rate notes
Amount:	$150 million
Maturity:	May 1, 2013
Coupon:	Six-month Libor plus 550 basis points
Price:	Par
Yield:	Six-month Libor plus 550 basis points
Call features:	Callable after May 1, 2007 at 102, 101, par on and after May 1, 2009
Equity clawback:	Until May 1, 2007 for 35% at par plus applicable coupon
Ratings:	Moody's: B3
	Standard & Poor's: B-
Price talk:	Six-month Libor plus 550 basis points (revised from 475-500 bps)
Senior subordinated notes
Amount:	$150 million
Maturity:	May 1, 2015
Coupon:	12½%
Price:	Par
Yield:	12½%
Spread:	829 basis points
Call features:	Callable after May 1, 2010 at 106.25, 104.167, 102.083, par on and after May 1, 2013
Equity clawback:	Until May 1, 2008 for 35% at 112.50
Ratings:	Moody's: Caa1
	Standard & Poor's: B-
Price talk:	12¼%-12½% (revised from 150 bps behind senior fixed tranche).

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