Warner Music sets price talk for $1.045 billion three-part bond sale

By Paul A. Harris

Portland, Ore., July 12 - Warner Music Group Corp. set price talk for its $1.045 billion three tranche high-yield bond offering on Tuesday, according to an informed source.

Two tranches are being issued by the operating company, WMG Acquisition Corp., while a third tranche is being issued by the holding company, WMG Holdings Corp.

WMG Acquisition's $150 million add-on to its 9½% senior secured notes due June 15, 2016 (/BB-/) is talked at 104 to 104.5. Those notes become callable on June 15, 2013 at 104.75. They also feature a major transaction call at 104.75 and have a three-year 35% equity clawback at 109.5 until June 15, 2012.

WMG Acquisition's $695 million tranche of senior notes due Oct. 1, 2018 (/B-/) are talked with an 11½% to 11¾% yield. The unsecured notes will become callable on Oct. 1, 2014 at par plus 75% of the coupon and will feature a three-year 35% equity clawback.

At the holding company level, WMG Holdings' $200 million tranche of senior notes due Oct. 1, 2019 (/B-/) are talked to price in the 1¾% area behind the proposed Warner Acquisition notes due Oct. 1, 2018. The holding company notes will become callable on Oct. 1, 2015 at par plus 50% of the coupon, and they feature a three-year 35% equity clawback.

The books close at 9 a.m. ET on Thursday, and the deal is set to price thereafter.

Credit Suisse Securities (USA) LLC and UBS Investment Bank are the joint bookrunners.

Proceeds will be used to fund the LBO of the company by Access Industries and to refinance debt.

Warner Music is a New York-based music content company.

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