Published on 3/4/2011 in the Prospect News High Yield Daily.
New Issue: Huntington Ingalls prices upsized $1.2 billion offering of seven-, 10-year notes
By Paul A. Harris
Portland, Ore., March 4 - Huntington Ingalls Industries, Inc. priced an upsized $1.2 billion two-part offering of senior notes (Ba3/B+/) on Friday, according to an informed source.
The Newport News, Va., shipbuilding company priced a $600 million tranche of 10-year notes at par to yield 7 1/8%.
The yield printed in the middle of the 7% to 7¼% price talk.
Huntington Ingalls also priced a $600 million tranche of seven-year notes at par to yield 6 7/8%. The yield on the seven-year notes printed on top of price talk, which had the notes coming 25 basis points inside of the yield of the 10-year notes.
Credit Suisse Securities, J.P. Morgan Securities LLC, RBS Securities Inc. and Wells Fargo Securities were the joint bookrunners.
The overall issue size was increased by $25 million, to $1.2 billion from $1.175 billion, with $25 million of proceeds shifted away from the company's term loan A.
Proceeds will be used to capitalize the company, as well as to fund a cash transfer to Northrop Grumman, which is spinning off Huntington Ingalls, Northrop's shipbuilding business.
Proceeds will also be used for general corporate purposes.
The proceeds will be funded into escrow prior to the effective date of the spinoff.
| Issuer: | Huntington Ingalls Industries, Inc.
|
| Amount: | $1.2 billion, increased from $1.175 billion
|
| Securities: | Senior notes
|
| Bookrunners: | Credit Suisse Securities, J.P. Morgan Securities LLC, RBS Securities Inc., Wells Fargo Securities
|
| Senior co-managers: | BNP Paribas, Mitsubishi UFJ Securities (USA), Morgan Stanley & Co. Inc., SunTrust Robinson Humphrey Inc.
|
| Co-managers: | Bank of America Merrill Lynch, Scotia Capital, SMBC Nikko Capital Markets, TD Securities, U.S. Bancorp Investments, Inc.
|
| Trade date: | March 4
|
| Settlement date: | March 11
|
| Ratings: | Moody's: Ba3
|
| Standard & Poor's: B+
|
| Distribution: | Rule 144A with registration rights and Regulation S
|
| Marketing: | Roadshow
|
|
|
| 10-year notes
|
| Amount: | $600 million
|
| Maturity: | March 15, 2021
|
| Coupon: | 7 1/8%
|
| Price: | Par
|
| Yield: | 7 1/8%
|
| Spread: | 364 bps
|
| Call features: | Make-whole call at Treasuries plus 50 bps until March 15, 2016, then callable at 103.563, 102.375, 101.188, par on and after March 15, 2019
|
| Equity clawback: | 35% at 107.125 until March 15, 2014
|
| Price talk: | 7% to 7¼%
|
|
|
| Seven-year notes
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| Amount: | $600 million
|
| Maturity: | March 15, 2018
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| Coupon: | 6 7/8%
|
| Price: | Par
|
| Yield: | 6 7/8%
|
| Spread: | 399 bps
|
| Call features: | Make-whole call at Treasuries plus 50 bps until March 15, 2015, then callable at 103.438, 101.719, par on and after March 15, 2017
|
| Equity clawback: | 35% at 106.875 until March 15, 2014
|
| Price talk: | 25 bps inside the 10-year notes
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