Activision $2.25 billion notes proceeds to fund into escrow; pricing midday Thursday

By Paul A. Harris

Portland, Ore., Sept. 12 - Proceeds from the Activision Blizzard, Inc. $2.25 billion bond offering will be funded into escrow, according to a market source.

The deal is in the market as part of the financing for the purchase of Activision shares from Vivendi.

The maximum escrow period will be 90 days from the settlement date, Sept. 19.

If the transaction is not consummated, the escrow will be refunded at par plus accrued interest.

Books on the deal are closed.

Pricing is now expected midday Thursday.

As reported, dealers moved back the pricing of the downsized and restructured $2.25 billion bond offering until Thursday; it had previously been expected to price on Wednesday.

There have also been covenant changes.

On Wednesday both remaining tranches were launched inside of earlier price talk.

An upsized $1.5 billion tranche of eight-year notes, which comes with three years of call protection, launched at 5 5/8%; price talk was 5¾% to 6%. The eight-year notes tranche was upsized from $1 billion.

An upsized $750 million tranche of 10-year notes, which comes with five years of call protection, launched at 6 1/8%; price talk was 6¼% to 6½%. The 10-year notes tranche was upsized from $500 million.

The restructured two-part bond deal (Ba2/BB+) was earlier downsized to $2.25 billion from $2.5 billion, with $250 million of the proceeds shifted to the company's term loan.

Now an all high-yield trade, a $1 billion tranche of investment-grade rated senior secured notes was withdrawn.

J.P. Morgan Securities LLC and BofA Merrill Lynch are the joint bookrunners for the Rule 144A and Regulation S for life deal.

Goldman Sachs & Co., Mitsubishi UFJ Securities International plc, HSBC Securities (USA) Inc., Mizuho Securities USA Inc., RBC Capital Markets, SunTrust Robinson Humphrey Inc. and U.S. Bancorp Investments Inc. are the co-managers.

Activision Blizzard is a Santa Monica, Calif.-based interactive entertainment publishing company.

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