Hot Topic talks $350 million eight-year notes to yield in 9% area

By Paul A. Harris and Aleesia Forni

Virginia Beach, Va., June 6 - Hot Topic, Inc. has set talk for its planned $350 million offering of senior secured notes due 2021 (B2/B) in the 9% area, a market source said.

Books close at 3 p.m. ET, and pricing is expected thereafter.

BofA Merrill Lynch and Jefferies LLC are the joint bookrunners.

The Rule 144A for life notes will be callable in three years at par plus 75% of the coupon.

A special call allows the issuer to redeem 10% of the notes annually at 103 during the non-call period.

The notes feature a three-year 40% equity clawback and a 101% poison put.

Proceeds, together with cash on hand and an equity contribution, will be used to fund the proposed acquisition of Hot Topic by affiliates of Sycamore Partners Management LLC.

The specialty retailer of pop culture-influenced licensed apparel is based in City of Industry, Calif.

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