By Paul A. Harris
Portland, Ore., Dec. 15 – Tesoro Corp. priced a restructured $1.6 billion offering of senior bullet notes in two tranches (Ba2/BB+) on Thursday, according to market sources.
The deal, which saw $150 million of proceeds shifted to the long-maturity tranche from the short-maturity tranche, featured a downsized $850 million amount of seven-year notes that priced at par to yield 4¾%. The tranche was downsized from $1 billion. The yield printed at the wide end of yield talk in the 4 5/8% area. Initial guidance was in the high 4% area.
In addition Tesoro priced an upsized $750 million amount of 10-year notes at par to yield 5 1/8%. The tranche was upsized from $600 million. The yield printed at the wide end of yield talk and initial guidance in the 5% area.
In an investor-friendly structural change, call protection was extended to the life of the bonds in both tranches. The seven-year notes were originally structured to come with three years of call protection. The 10-year notes were originally structured to come with five years of call protection.
The quick-to-market deal was being shopped by means of an internet roadshow.
Goldman Sachs & Co. was the left bookrunner. Mizuho Securities USA Inc., MUFG and Wells Fargo Securities LLC were the joint bookrunners.
The San Antonio-based owner, operator, developer and acquirer of crude oil and refined products logistics assets plans to use the proceeds, along with cash on hand and revolver borrowings, to fund the cash consideration and other amounts payable under the terms of its merger with Western Refining, Inc., and to repay and redeem certain outstanding debt of Western Refining and its subsidiaries.
| Issuer: | Tesoro Corp.
|
| Amount: | $1.6 billion
|
| Securities: | Senior notes
|
| Left bookrunner: | Goldman Sachs & Co.
|
| Joint bookrunners: | J.P. Morgan Securities LLC, Mizuho Securities USA Inc., MUFG, Wells Fargo Securities LLC
|
| Co-managers: | SunTrust Robinson Humphrey Inc., UBS Securities LLC
|
| Trade date: | Dec. 15
|
| Settlement date: | Dec. 22
|
| Ratings: | Moody's: Ba2
|
| S&P: BB+
|
| Distribution: | Rule 144A with registration rights and Regulation S
|
| Marketing: | Quick to market
|
|
|
| Seven-year notes
|
| Amount: | $850 million, decreased from $1 billion
|
| Maturity: | Dec. 15, 2023
|
| Coupon: | 4¾%
|
| Price: | Par
|
| Yield: | 4¾%
|
| Call protection: | Non-callable, decreased from three years
|
| Price talk: | 4 5/8% area
|
|
|
| 10-year notes
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| Amount: | $750 million, increased from $600 million
|
| Maturity: | Dec. 15, 2026
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| Coupon: | 5 1/8%
|
| Price: | Par
|
| Yield: | 5 1/8%
|
| Call: | Non-callable, decreased from five years
|
| Price talk: | 5% area
|
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