By Paul A. Harris
St. Louis, June 28 - Windstream Corp. priced $2.546 billion of senior notes (Ba3/BB-) in two parts on Wednesday, according to a market sources.
The company priced $800 million of seven-year notes at par to yield 8 1/8%. The yield came at the wide end of the 8% to 8 1/8% price talk, which had been revised from 7¾% to 8%.
The company also priced $1.746 billion of 8 5/8% 10-year notes at 97.547 to yield 9%. The notes came on top of the price talk, which had been revised from earlier talk that had the notes pricing in a range of 8 1/8% to 8½% (3/8% to ½% wide of the original talk on the seven-year notes). The sale of the 10-year notes generated $1.703 billion of proceeds.
The overall two-part transaction generated $2.503 billion of proceeds.
Merrill Lynch & Co. and JP Morgan are joint bookrunners for both tranches of the Rule 144A offering. Banc of America Securities LLC, Citigroup, Wachovia Securities and Barclays Capital are co-managers for the seven-year tranche only.
The deal came with covenant changes:
• The debt incurrence covenant was reduced to 4.5-times from 5.25-times;
• The secured debt incurrence covenant was reduced to 2.5 times from 3.75 times;
• And the "restricted payments test" covenant was revised to less than 1.4 times from 1.3 times.
Proceeds, along with $2.9 billion of new senior secured credit facilities, will be used to help fund the acquisition of Alltel Corp. Inc.'s landline business from Valor Communications Group Inc.
Windstream is a Little Rock, Ark.-based telecommunications company created by Valor Communications' acquisition of Alltel's landline telecom business.
| Issuer: | Windstream Corp.
|
| Face amount: | $2.546 billion
|
| Proceeds: | $2.503 billion (approximate)
|
| Security description: | Senior notes
|
| Trade date: | June 28
|
| Settlement date: | July 17
|
| Ratings: | Moody's: Ba3
|
| Standard & Poor's: BB-
|
| Distribution: | Rule 144A
|
|
|
| Seven-year notes
|
| Amount: | $800 million
|
| Maturity: | Aug. 1, 2013
|
| Bookrunners: | Merrill Lynch & Co., JP Morgan
|
| Co-managers: | Banc of America Securities LLC, Citigroup, Wachovia Securities, Barclays Capital
|
| Coupon: | 8 1/8%
|
| Price: | Par
|
| Yield: | 8 1/8%
|
| Spread: | 292 bps
|
| Call protection: | Make-whole call at Treasuries plus 50 bps
|
| Equity clawback: | Until Aug. 1, 2009 for 35% at 108.125
|
| Price talk: | 8% to 8 1/8% (revised from 7¾% to 8%)
|
|
|
| 10-year notes
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| Face amount: | $1.746 billion
|
| Proceeds: | $1.703 billion approximate
|
| Maturity: | Aug. 1, 2016
|
| Bookrunners: | Merrill Lynch & Co., JP Morgan
|
| Coupon: | 8 5/8%
|
| Price: | 97.547
|
| Yield: | 9%
|
| Spread: | 378 bps
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| Call features: | Callable on and after Aug. 1, 2011 at 104.313, 102.875, 101.438, par on and after Aug. 1, 2014
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| Price talk: | 8 5/8% at a discount to yield 9%, revised from earlier talk that had the notes pricing in a range of 8 1/8% to 8½% (3/8% to ½% wide of the original talk on the seven-year notes)
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