Warner Music driving by with $535 million eight-year secured notes; initial talk high-3% area

By Paul A. Harris

Portland, Ore., Nov. 17 – WMG Acquisition Corp. plans to price a $535 million offering of eight-year senior secured notes (existing ratings Ba3/BB+) in a Wednesday drive-by following a conference call with investors, according to market sources.

Initial guidance is in the high-3% area, according to a trader.

Credit Suisse Securities (USA) LLC is the left lead bookrunner.

The Rule 144A and Regulation S notes become callable after three years at par plus 50% of the coupon. A special call provision allows the issuer to redeem 10% of the notes annually at 103 during the non-call period. The notes also feature a three-year 40% equity clawback, and a 101% poison put.

The issuing entity is a wholly owned subsidiary of New York-based Warner Music Group Corp., an entertainment conglomerate, which plans to use proceeds from the notes for potential acquisitions of certain music and music-related assets, or for general corporate purposes.

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