Rock-Tenn talks $200 million eight-year senior notes at 9 3/8% area

By Paul A. Harris

St. Louis, Feb. 27 - Rock-Tenn Co. set price talk for its $200 million offering of eight-year senior notes (Ba3/BB-) at the 9 3/8% area on Wednesday, according to an informed source.

The roadshow is set to conclude at the end of the day on Thursday for accounts viewing the transaction through Thursday.

Pricing is expected on Friday.

Banc of America Securities LLC, Wachovia Securities and SunTrust Robinson Humphrey are joint bookrunners for the Rule 144A with registration rights offering. Rabo Securities, Deutsche Bank Securities and Jefferies & Co. are the co-managers.

The notes come with four years of call protection. There is a change-of-control put at 101.

The notes, which come with customary high-yield covenants, are guaranteed on a senior basis by all existing and future domestic subsidiaries that guarantee obligations under the company's new credit facilities.

Proceeds will be used to partially finance the acquisition of Southern Container Corp.

The bond portion of the financing was downsized from $400 million, with $200 million of proceeds shifted to the company's term loan A, which was upsized to $550 million from $350 million.

The overall size of the credit facility was upsized to $1.2 billion from $1.0 billion.

Rock-Tenn is buying Southern Container, a Hauppauge, N.Y., privately held containerboard manufacturing and corrugated packaging business, for $851 million in cash. The acquisition is expected to close in March.

Rock-Tenn is a Norcross, Ga., manufacturer of packaging products, merchandising displays and bleached and recycled paperboard.

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