Thomson Learning restructures $1.6 billion junk bond offering, sets price talk

By Paul A. Harris

St. Louis, June 21 - Thomson Learning restructured its proposed $1.6 billion two-part junk bond offering on Thursday, according to market sources.

TL Acquisitions Inc., the operating company, talked a downsized $1.2 billion tranche of 7.5-year senior unsecured notes (Caa1/CCC+) at 10¼% to 10½%. A planned toggle feature, which would have allowed the company to make in-kind coupon payments in return for an incrementally higher interest rate, was abandoned.

The senior unsecured note tranche was downsized from $1.35 billion.

Meanwhile the company set talk on an upsized $400 million tranche of eight-year senior subordinated discount notes (Caa2/CCC+) at 12¾ to 13%. The notes come with a two-year zero coupon, an option that was added in Thursday's restructuring. Previously it had been a straight senior subordinated cash-pay tranche.

The subordinated tranche was upsized from $250 million.

In addition to the structural changes, Thomson also made modifications to the bonds' debt test and restricted payments covenants.

The books close at noon ET on Friday.

JP Morgan, Citigroup, UBS Investment Bank, RBC Capital Markets and RBS Greenwich Capital are underwriters for the note offering.

The Stamford, Conn., textbook publisher is also in the market with $540 million of eight-year senior payment-in-kind notes via TL Holdings Inc. No price talk or any other information was available on the holding company tranche on Thursday, sources said.

Proceeds will be used to fund the acquisition of the company by Apax Partners and OMERS Capital Partners.

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