Published on 5/1/2015 in the Prospect News High Yield Daily.
New Issue: Extended Stay prices $500 million 10-year notes at par to yield 5¼%
By Paul Deckelman
New York, May 1 – Extended Stay America, Inc.’s $500 million offering of 10-year senior notes (B3/BB-) priced at par to yield 5¼% on Friday, junk bond market sources said.
That compares with the price talk in the area of 5 3/8% that circulated in the market on Thursday.
The offering priced after a short roadshow that began earlier in the week.
Deutsche Bank Securities Inc. was the left bookrunner for the Rule 144A and Regulation S for life offering. Citigroup Global Markets Inc., Goldman Sachs & Co., J.P. Morgan Securities LLC, Barclays and Credit Suisse Securities (USA) LLC were the joint bookrunners.
The notes come with five years of call protection and feature a three year 35% equity clawback and a 101% poison put.
The issuing entity is subsidiary ESH Hospitality, Inc.
The Charlotte, N.C.-based owner and operator of company-branded hotels plans to use the proceeds to repay mortgage debt.
| Issuer: | ESH Hospitality, Inc.
|
| Amount: | $500 million
|
| Maturity: | May 1, 2025
|
| Securities: | Senior notes
|
| Left bookrunner: | Deutsche Bank Securities Inc.
|
| Joint bookrunners: | Citigroup Global Markets Inc., Goldman Sachs & Co., J.P. Morgan Securities LLC, Barclays, Credit Suisse Securities (USA) LLC
|
| Co-manager: | Lebenthal & Co., LLC
|
| Coupon: | 5¼%
|
| Price: | Par
|
| Yield: | 5¼%
|
| Spread: | 318 bps over Treasuries
|
| Call protection: | Non-callable for five years, then callable on or after May 1, 2020 at 102.625, on or after May 1, 2021 at 101.75, on or after May 1, 2022 at 100.875 and finally on or after May 1, 2023 at par
|
| Equity clawback: | For up to 35% of the issue until May 1, 2018 at 105.25
|
| Change-of-control put: | 101%
|
| Trade date: | May 1
|
| Settlement date: | May 15 (T+10)
|
| Ratings: | Moody’s: B3
|
| Standard & Poor’s: BB-
|
| Distribution: | Rule 144A and Regulation S with no registration rights
|
| Price talk: | 5 3/8% area
|
| Marketing: | Roadshow
|
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