Published on 2/1/2019 in the Prospect News High Yield Daily.
New Issue: TransDigm sells $750 million notes in two tranches, lifts week’s total to $4.55 billion
By Paul A. Harris
Portland, Ore., Feb. 1 – Two days after TransDigm, Inc. priced an upsized $3.8 billion issue of secured notes and abandoned an effort to place subordinated notes, the company returned to the market on Friday to issue a $200 million tap the secured notes and $550 million of subordinated notes.
On Friday TransDigm priced the $200 million add-on to its senior secured notes due March 15, 2026 (Ba3/B+) at 101 to yield 6.07%. The issue price came on top of price talk.
Morgan Stanley & Co. LLC, Credit Suisse Securities (USA) LLC, Citigroup Global Markets Inc., Barclays, RBC Capital Markets LLC, Credit Agricole CIB and KCM Capital Partners were the joint bookrunners for the secured notes.
Proceeds will be used to fund a portion of the acquisition of Esterline Technologies Corp., a Bellevue, Wash.-based manufacturer principally serving aerospace and defense markets.
The Cleveland-based producer of highly engineered aircraft components also priced $550 million of eight-year senior subordinated notes (B3/B) at par to yield 7½%. The yield printed on top of yield talk.
Morgan Stanley, Credit Suisse, KCM, Citigroup, Barclays and RBC, Credit Agricole and HSBC were the joint bookrunners for the subordinated notes.
TransDigm plans to use the proceeds from the subordinated notes to redeem its 5½% senior subordinated notes due 2020.
On Wednesday TransDigm withdrew a $1 billion tranche of eight-year senior subordinated notes. Those proceeds were shifted to 6¼% secured notes.
| Issuer: | TransDigm, Inc.
|
| Face amount: | $750 million
|
| Trade date: | Feb. 1
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| Settlement date: | Feb. 13
|
| Marketing: | Quick to market
|
|
|
| Add-on notes
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| Amount: | $200 million
|
| Proceeds: | $202 million
|
| Maturity: | March 15, 2026
|
| Security description: | Add-on to 6¼% senior secured notes due March 15, 2026
|
| Bookrunners: | Morgan Stanley & Co. LLC, Credit Suisse Securities (USA) LLC, Citigroup Global Markets Inc., Barclays, RBC Capital Markets LLC, Credit Agricole CIB, KCM Capital Partners
|
| Coupon: | 6¼%
|
| Price: | 101
|
| Yield: | 6.07%
|
| Spread: | 346 bps
|
| First call: | Make-whole call at Treasuries plus 50 bps until March 15, 2022, then callable at 103.125
|
| Equity clawback: | 35% at 106.25 until March 15, 2022
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| Ratings: | Moody's: Ba3
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| S&P: B+
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| Distribution: | Rule 144A for life and Regulation S
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| Price talk: | 101
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| Original issue: | $3.8 billion priced at par on Jan. 30, 2019
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| Total issue size: | $4 billion
|
|
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| Senior subordinated notes
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| Amount: | $550 million
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| Maturity: | March 15, 2027
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| Bookrunners: | Morgan Stanley, Credit Suisse, KCM, Citigroup, Barclays, RBC, Credit Agricole, HSBC
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| Coupon: | 7½%
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| Price: | Par
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| Yield: | 7½%
|
| Spread: | 485 bps
|
| First call: | Make-whole call at Treasuries plus 50 bps until March 15, 2022, then callable at 103.75
|
| Equity clawback: | 35% at 107.5 until March 15, 2022
|
| Ratings: | Moody's: B3
|
| S&P: B
|
| Distribution: | Rule 144A and Regulation S with registration rights
|
| Price talk: | 7½%
|
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