By Lisa Kerner
Charlotte, N.C., April 19 - HD Supply, Inc. issued about $757 million of mezzanine debt in the form of 14 7/8% senior notes due 2020 on April 12 in connection with the refinancing of the senior portion of its capital structure, according to an 8-K filing with the Securities and Exchange Commission.
Proceeds were used to repay debt.
HD Supply issued the notes to investment funds associated with Bain Capital Partners, LLC, Carlyle Investment Management, LLC and Clayton, Dubilier & Rice, LLC.
The notes are effectively subordinated to all of the company's and the guarantors' secured debt.
HD Supply may redeem the notes in whole or in part any time prior to April 12, 2015 at a price equal to par plus a make-whole premium. Beginning April 12, 2015, the redemption price is 111.1563. It will step down to 107.4375 in April 2016, to 103.7188 in April 2017 and to par in April 2018.
In addition, the company may redeem up to 35% of the notes prior to April 12, 2015 at 114.875 under an equity clawback provision.
Beginning April 12, 2017, HD Supply is required to redeem or pay portions of the notes in amounts intended to ensure the notes are not treated as applicable high-yield discount obligations for U.S. federal income tax purposes, the filing said.
Under the indenture, HD Supply is limited in its ability to, among other things, incur debt, pay dividends, redeem stock or sell assets.
Several of covenants will cease to apply as long as the notes have investment-grade ratings from both Moody's Investors Service and Standard & Poor's.
The notes and guarantees have not been registered under the Securities Act.
HD Supply is an Atlanta-based distributor of building materials and tools.
| Issuer: | HD Supply, Inc.
|
| Issue: | Senior notes
|
| Amount: | $757 million
|
| Maturity: | 2020
|
| Coupon: | 14 7/8%
|
| Call option: | Prior to April 12, 2015 at par plus make-whole premium; at 111.1563 beginning April 12, 2015; redemption price will step down to 107.4375 in April 2016, to 103.7188 in April 2017 and to par in April 2018; up to 35% of notes may be redeemed prior to April 12, 2015 at 114.875 under equity clawback provision
|
| Settlement date: | April 12
|
| Distribution: | Private placement
|
| Purchasers: | Funds associated with Bain Capital Partners, LLC, Carlyle Investment Management, LLC and Clayton, Dubilier & Rice, LLC
|
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