By Paul A. Harris
Portland, Ore., June 6 - Hot Topic, Inc. priced a $355 million issue of 9¼% eight-year senior secured notes (B2/B/) at 98.618 to yield 9½% on Thursday, according to an informed source.
The yield printed 37.5 basis points beyond the wide end of yield talk that was set in the 9% area.
BofA Merrill Lynch and Jefferies LLC were the joint bookrunners for the issue, which was increased in size from $350 million.
The notes feature a make-whole call at Treasuries plus 50 bps until June 15, 2016, after which they become callable at 106.938. A special call provision that would have allowed the issuer to redeem 10% of the notes annually at 103 during the non-call period was eliminated.
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 issuer is a specialty retailer of pop culture-influenced licensed apparel is based in City of Industry, Calif.
| Issuer: | Hot Topic, Inc.
|
| Face amount: | $355 million, increased from $350 million
|
| Proceeds: | $350.1 million
|
| Maturity: | June 15, 2021
|
| Securities: | Senior secured notes
|
| Bookrunners: | BofA Merrill Lynch, Jefferies LLC
|
| Coupon: | 9¼%
|
| Price: | 98.618
|
| Yield: | 9½%
|
| Spread: | 782 bps
|
| Call features: | Make-whole call at Treasuries plus 50 bps until June 15, 2016, then callable at 106.938, 104.625, 102.313, par on and after June 15, 2019 (Special call provision that would have allowed the issuer to redeem 10% of the notes annually at 103 during the non-call period was eliminated)
|
| Equity clawback: | 40% at 109.25 until June 15, 2016
|
| Trade date: | June 6
|
| Settlement date: | June 12
|
| Ratings: | Moody's: B2
|
| Standard & Poor's: B
|
| Distribution: | Rule 144A and Regulation S
|
| Price talk: | 9% area
|
| Marketing: | Roadshow
|
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