By Paul Deckelman
New York, Nov. 3 – Associated Materials Group, Inc. priced $675 million of 9% senior secured notes due Jan. 1, 2024, high-yield syndicate sources said on Thursday.
The notes priced at 97 to yield 9.59%.
The Rule 144A for life and Regulation S transaction came to market with little advance fanfare via bookrunners Goldman Sachs & Co. and UBS Securities LLC.
The notes come with three years of call protection.
Associated Materials, a Cuyahoga Falls, Ohio-based vertically integrated manufacturer and distributor of exterior residential building products in the United States and Canada, including vinyl windows, siding, railings and fencing, and aluminum and steel siding, plans to use the expected new-deal proceeds largely for debt repayment.
The company intends to fund a tender offer for any and all of the company’s outstanding 9 1/8% senior secured notes due 2017 and to redeem, satisfy and discharge any of the 2017 notes that are not purchased in that tender offer, as well as repaying certain debt outstanding under the company's asset-based credit facility.
The company will also repay a first-lien promissory note held by an affiliate of Hellman & Friedman LLC, a New York-based private equity firm whose affiliated funds hold 97% ownership of Associated Materials Group Inc.
Associated Materials Group is the 100% owner of Associated Materials Inc., which, in turn, is the 100% owner of the company’s actual operating unit, Associated Materials LLC.
Associated Materials Group has entered into an agreement with certain investors, under which it has agreed to issue convertible preferred stock and warrants to purchase shares of group’s common stock. Upon completion of the convertible preferred stock issuance, the group expects to contribute net proceeds of about $273 million from that sale to its indirect subsidiary, Associated Materials LLC.
At that time, Associated Materials LLC and its wholly owned subsidiary, AMH New Finance, Inc., will assume the group’s obligations under the 9% notes, and the notes will be guaranteed by all of Associated Materials LLC’s direct and indirect domestic subsidiaries, other than AMH New Finance.
Parent company Associated Materials Group will be released from its obligations under the notes, and the proceeds from the notes – which will have been held in escrow since their settlement – will be released to Associated Materials LLC and used for the purposes described above.
| Issuer: | Associated Materials Group, Inc.
|
| Amount: | $675 million
|
| Security description: | Senior secured notes
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| Maturity: | Jan. 1, 2024
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| Bookrunners: | Goldman Sachs & Co., UBS Securities LLC
|
| Co-managers: | PNC Capital Markets LLC, SunTrust Robinson Humphrey Inc.
|
| Coupon: | 9%
|
| Price: | 97
|
| Yield: | 9.59%
|
| Call protection: | Non-callable for first three years, then callable at par plus 75% of coupon, then at par plus 50% of coupon, then par plus 25% of coupon, and finally, at par
|
| Trade date: | Nov. 3
|
| Settlement date: | Nov. 22 (T+12)
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| Distribution: | Rule 144A for life and Regulation S (no registration rights)
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