By Paul Deckelman
New York, June 21 - Calumet Specialty Products Partners, LP and its wholly owned subsidiary Calumet Finance Corp. were heard by high-yield syndicate sources on Thursday to have priced a quick-to market, upsized $275 million offering of eight-year senior notes (B3/B).
The bonds came to market just a few hours after the company announced plans for its new deal. The joint book-running managers were Bank of America Merrill Lynch, Barclays Capital Inc., J.P. Morgan Securities LLC and Wells Fargo Securities, LLC. The co-managers were Deutsche Bank Securities Inc. and Goldman Sachs & Co.
The 9 5/8% notes due 2020 priced at 98.25 to yield 9.941%, about in line with pre-deal market price talk of a yield in the 10% area with around 2 points of original issue discount.
The deal was upsized from the originally announced $250 million.
The notes are being sold to qualified investors under Rule 144A and Regulation S with registration rights.
The bonds have call protection for the first four years after issue and a standard change-of-control put provision at 101% of the principal amount plus accrued interest.
Indianapolis-based Calumet, a producer of high-quality specialty hydrocarbon products, plans to deposit the proceeds from the bond sale into escrow pending the completion of its previously announced $335 million acquisition of Royal Purple, Inc., a producer of high-performance synthetic lubricants. The funds will be released when that acquisition closes and will be used to fund a portion of the purchase price and related expenses.
That closing is expected to take place sometime next month. But should the closing not have occurred by Sept. 15, or if the purchase agreement is terminated at any time before then, the escrowed funds will be applied to the mandatory redemption of the notes at a price equal to 100% of their initial offering price plus accrued interest up to the redemption date.
| Issuers: | Calumet Specialty Products Partners LP and Calumet Finance Corp.
|
| Issue: | Senior notes
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| Amount: | $275 million (upsized from originally announced $250 million)
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| Maturity | Aug. 1, 2020
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| Joint bookrunners: | Bank of America Merrill Lynch, Barclays Capital Inc., J.P. Morgan Securities LLC and Wells Fargo Securities, LLC
|
| Co-managers: | Deutsche Bank Securities Inc. and Goldman Sachs & Co.
|
| Coupon: | 9 5/8%
|
| Price: | 98.25
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| Yield: | 9.941%
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| Spread: | 872 bps over 3.5% Treasury due May 15, 2020
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| Call option: | Non-callable until Aug. 1, 2016
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| Mandatory redemption: | At par plus accrued interest if Royal Purple acquisition does not close by Sept. 15
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| Put option: | At 101% of par plus accrued interest upon a change of control
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| Trade date: | June 21
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| Settlement date: | June 29
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| Ratings: | Moody's: B3
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| Standard & Poor's: B
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| Distribution: | Rule 144A/Regulation S with registration rights
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| Marketing: | Quick to market
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| Price talk: | 10% area, inclusive of 2 points OID
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