Aero Invest €350 million 10-year PIK notes talked Euribor plus 850 basis points

By Paul A. Harris

St. Louis, Feb. 14 - Aero Invest 1 SA's (Avio) €350 million quick-to-market offering of 10-year senior floating-rate pay-in-kind notes is talked at Euribor plus 850 basis points, according to a syndicate source.

Pricing is expected to occur late Tuesday morning, Eastern time.

Goldman Sachs & Co. has the physical books for the Rule 144A/Regulation S with no registration rights notes. Lehman Brothers is the joint bookrunner. Banca Caboto SpA is the co-manager.

The PIK-for-life notes will become callable after one year at par, with the call premium stepping up to 102 after two years, declining to 101 after three years and again to par after four years.

The notes will also feature a 150-basis point step-up after March 1, 2008 if net consolidated leverage is greater than or equal to 3x at the Avio Holding SpA level.

Proceeds will be used to repay a vendor loan and to fund a shareholder distribution.

The Turin, Italy-based manufacturer of aerospace components, formerly FiatAvio, was acquired in July 2003 by the Carlyle Group, which has a 70% stake, and by Finmeccanica, which has a 30% stake.

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