New Issue: Michael Foods sells $100 million proceeds discount notes to yield 9¾%

By Paul A. Harris

St. Louis, Sept. 20 - Michael Foods, Inc.'s parent company M-Foods Holdings sold $154.06 million face amount of nine-year senior discount notes (Caa1/B-) Friday at 64.91 to yield 9¾%, according to an informed source. The sale generated about $100 million in proceeds.

The notes have a zero coupon until April 1, 2009, after which the coupon steps up to 9¾%.

Banc of America Securities ran the books for the Rule 144A-for-life issue.

Proceeds will be used to fund a dividend payment.

Minnetonka, Minn.-based Michael Foods is a diversified food processor and distributor with particular interests in egg products, refrigerated grocery products and refrigerated potato products.

Issuer:	M-Foods Holdings (Michael Foods, Inc.)
Face amount:	$154.06 million
Proceeds:	$100 million
Maturity:	Oct. 1, 2013
Security description:	Senior discount notes
Bookrunner:	Banc of America Securities
Coupon:	Zero until April 1, 2009 then steps up to 9¾%
Price:	64.91
Yield:	9¾%
Spread:	515 basis points
Call features:	Callable after April 1, 2009 (4.5 years) at 104.875, 103.25, 101.625, par on or after April 1, 2012
Equity clawback:	Until April 1, 2007 for 35% at par plus the applicable coupon
Trade date:	Sept. 17
Settlement date:	Sept. 17
Ratings:	Moody's: Caa1
	Standard & Poor's: B-

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