By Paul Deckelman
New York, May 11 – Tallgrass Energy Partners, LP priced an upsized $350 million add-on to its existing 5˝% senior notes due Sept. 15, 2024 (B1/BB+) on Thursday, high-yield syndicate sources said.
The offering was increased in size from an originally announced $200 million.
The additional notes priced at par, in line with price talk of a 99.5 to par context.
The Rule 144A and Regulation S for life add-on was brought to market via joint bookrunners Credit Suisse Securities (USA) LLC, Capital One Securities, Inc., Citigroup Global Markets Inc., Morgan Stanley & Co. LLC, MUFG, PNC Capital Markets LLC and U.S. Bancorp Investments, Inc.
The company’s Tallgrass Energy Finance Corp. subsidiary will be the co-issuer of the notes along with its parent.
The transaction was announced on Wednesday and was shopped around to potential investors via a Wednesday afternoon conference call before pricing on Thursday.
The new Rule 144A notes will be immediately fungible with the company’s $400 million of existing 5˝% notes due 2024, which it sold last summer and will trade under the same Cusip number, while the new Regulation S notes will not initially trade under the same Cusip number as the original notes. Tallgrass and its financing subsidiary priced those original notes at par on Aug. 18, 2016 after a roadshow, with the proceeds slated to repay revolving credit facility debt.
Like the original notes, the add-on paper will be non-callable until Sept. 15, 2019 and then will be initially callable at 104.125.
There is an equity clawback feature allowing the company to redeem up to 35% of the issue at 105.5 until Sept. 15, 2019, and a change-of-control provision allowing holders to put the bonds back to the company at 101% upon such an event.
Tallgrass, a Leawood, Kan.-based publicly traded, growth-oriented limited partnership that owns, operates, acquires and develops midstream energy assets in North America, plans to use the proceeds from the add-on deal to repay revolving credit facility debt.
| Issuers: | Tallgrass Energy Partners, LP/Tallgrass Energy Finance Corp.
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| Amount: | $350 million, upsized from originally announced $200 million
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| Maturity: | Sept. 15, 2024
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| Securities: | Add-on to existing senior notes
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| Bookrunners: | Credit Suisse Securities (USA) LLC, Capital One Securities, Inc., Citigroup Global Markets Inc., Morgan Stanley & Co. LLC, MUFG and PNC Capital Markets LLC
|
| Coupon: | 5˝%
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| Price: | Par
|
| Yield to worst: | 5.498%
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| Spread: | 349 bps
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| Call protection: | Non-call until Sept. 15, 2019, then callable at 104.125; callable on or after Sept. 15, 2020 at 102.75, on or after Sept. 15, 2021 at 101.375, and then at par on or after Sept. 15, 2022
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| Equity clawback: | Up to 35% of issue until Sept. 15, 2019 at 105.5
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| Change-of-control put: | 101% plus accrued and unpaid interest
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| Trade date: | May 11
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| Settlement date: | May 16 (T+3)
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| Ratings: | Moody’s: B1
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| S&P: BB+
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| Distribution: | Rule 144A and Regulation S for life
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| Price talk: | 99.5-100
|
| Marketing | Short roadshow/investor call
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