By Paul Deckelman
New York, Jan. 13 - R.H. Donnelley Corp. was heard by high yield syndicate sources on Friday to have priced a three-part offering of seven- and 10-year senior notes and senior discount notes. The company sold notes having a total face value of $2.235 billion, although combined proceeds from the offering add up to slightly more than $2.142 billion.
R.H. Donnelley priced $1.21 billion of 8 7/8% senior notes due Jan. 15, 2016 at par, for a spread of 449 basis points over the comparable Treasury issue. The notes priced right in the middle of talk suggesting a yield of 8¾% and 9%.
There were also two tranches of 6 7/8% senior discount notes due Jan. 15, 2013, carrying identical terms, which priced at 90.981 to yield 8 5/8%, or 425 basis points over Treasuries. The notes priced in the middle of price talk of 8½% to 8¾%.
Donnelley split the discount notes up into two parts, due to the different uses it plans for the proceeds. The Cary, N.C.-based Yellow Pages publisher and directional media company sold $365 million face amount of the notes, or $332,080,650 of proceeds, in the A-1 tranche, and plans to use those proceeds to help fund the repurchase of all of the company's outstanding convertible preferred stock.
It also sold $660 million face amount of the notes, or $600,474,600 proceeds, in the A-2 tranche, and will use a portion of those proceeds and the proceeds of the 8 7/8% notes, which it designated as the A-3 tranche, to pay shareholders of Dex Media Inc. in connection with Donnelley's planned acquisition of Englewood, Colo.-based Dex, a rival provider of print directories and internet-based local search services.
Donnelley announced in early October that it had agreed to buy Dex - which was formed several years ago when Qwest Communications International Inc. spun off its telephone directories unit - in a cash-and-stock deal valued at $4.2 billion, creating the third-largest print and internet directory publisher in the United States, with pro forma annual revenue of $2.7 billion. Donnelley is also assuming $5.3 billion of Dex debt as part of the acquisition.
The remaining proceeds from the A-2 and A-3 notes will be used for general corporate purposes including the payment of fees and expenses.
The notes, all rated Caa1 by Moody's Investors Service, B by Standard & Poor's and CCC+ by Fitch Ratings, are being sold under Rule 144A with registration rights and Regulation S.
The discount notes due 2013 are non-callable for the first three years while the senior notes due 2016 are non-callable for the first five years.
All three tranches, well as the existing $300 million of R.H. Donnelley (Holdco) 6 7/8% notes due Jan. 15, 2013, which priced at par on Jan. 11, 2005, are pari passu.
The deal, which was announced by Donnelley on Jan. 5, came to market following a short roadshow earlier in the week via an underwriting team led by joint bookrunners JP Morgan, Bear Stearns & Co. and Credit Suisse, along with co-managers Goldman Sachs & Co., Deutsche Bank Securities, Wachovia Securities, UBS Investment Bank and Banc of America Securities.
| Issuer: | R.H. Donnelley Corp.
|
| Bookrunners: | JP Morgan, Bear Stearns, Credit Suisse
|
| Co-managers: | Goldman Sachs, Deutsche Bank Securities, UBS Investment Bank, Banc of America Securities
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| Settlement: | Jan. 27 (T+9)
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| Ratings: | Moody's: Caa1
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| S&P: B
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| Fitch: CCC+
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|
|
| A-1 Tranche
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| Amount: | $365 million (face), $332,080,650 (proceeds)
|
| Security: | Senior discount notes
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| Maturity: | Jan. 15, 2013
|
| Coupon: | 6 7/8%
|
| Price: | 90.981
|
| Yield: | 8 5/8%
|
| Price talk: | 8½% to 8¾%
|
| Spread: | 425 basis points over Treasuries
|
| Call: | Non-callable through Jan. 15, 2009
|
| Equity clawback: | 40% through Jan. 15, 2008
|
|
|
| A-2 Tranche
|
| Amount: | $660 million (face), $600,470,600 (proceeds)
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| Security: | Senior discount notes
|
| Maturity: | Jan. 15, 2013
|
| Coupon: | 6 7/8%
|
| Price: | 90.981
|
| Yield: | 8 5/8%
|
| Price talk: | 8½% to 8¾%
|
| Spread: | 425 basis points over Treasuries
|
| Call: | Non-callable through Jan. 15, 2009
|
| Equity clawback: | 40% through Jan. 15, 2008
|
|
|
| A-3 Tranche
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| Amount: | $1.21 billion
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| Security: | Senior notes
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| Maturity: | Jan. 15, 2016
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| Coupon: | 8 7/8%
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| Price: | Par
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| Yield: | 8 7/8%
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| Price talk: | 8¾% to 9%
|
| Spread: | 449 basis points over Treasuries
|
| Call: | Non-callable through Jan. 15, 2011
|
| Equity clawback: | 40% through Jan. 15, 2009
|
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