HD Supply sets price talk in benchmark two-part offering of notes

By Paul A. Harris

Portland, Ore., April 3 - HD Supply, Inc. set price talk for two tranches of notes, which are part of its $2,625,000,000 of new bond and bank debt, a syndicate sources said on Tuesday.

The deal features $1.85 billion of debt that will come in the form of a term loan B and seven-year senior secured first-priority notes, which come with three years of call protection.

The notes (B2/B+) are talked to yield 8% to 8¼%.

The loan and first-priority notes tranches, the sizes of which remain to be determined, are being led by joint bookrunners Bank of America Merrill Lynch, Goldman Sachs & Co., Barclays Capital Inc., J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Wells Fargo Securities LLC and UBS Securities Inc.

In addition HD Supply is offering $775 million of eight-year senior secured second-priority notes (Caa1/CCC+), which come with four years of call protection.

Talk on the second-priority notes is in the 10¾% area.

On the second-lien tranche Goldman Sachs, Bank of America Merrill Lynch, Barclays Capital, JPMorgan, Credit Suisse, Deutsche Bank, Wells Fargo and UBS are the joint bookrunners.

The books close at 4 p.m. ET on Wednesday.

The deal is set to price on Thursday.

Proceeds from the Rule 144A and Regulation S with registration rights notes and the new term loan B will be used to refinance HD's 12% senior notes due 2014, its ABL credit facility and its existing senior secured term loan.

HD Supply is an Atlanta-based distributor of building materials and tools.

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