Reader's Digest downsizes notes to $600 million, talks issue at 9%-9¼%

By Paul A. Harris

St. Louis, Feb. 26 - Reader's Digest Association Inc. has shifted $150 million of leveraged buyout financing to its term loan from its high-yield bond offering, market sources told Prospect News on Monday.

Meanwhile the company has set price talk for the downsized $600 million offering of 10-year guaranteed subordinated notes (Caa1/CCC+) at 9% to 9¼%.

The bond transaction, which was downsized from $750 million, is expected to price on Tuesday morning.

JP Morgan, Merrill Lynch & Co., Citigroup and RBS Greenwich Capital are joint bookrunners for the notes, which are being sold via Rule 144A and Regulation S with registration rights.

The notes come with five years of call protection.

Proceeds will be used to help fund the $2.4 billion LBO by an investor group led by Ripplewood Holdings LLC, J. Rothschild Group, Golden Tree Asset Management, GSO Capital, Merrill Lynch and Magnetar Capital.

The prospective issuer is a Pleasantville, N.Y., publisher and direct marketing company.

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