Morning Commentary: Protection 1 terms emerge; NBTY shops deal; PQ hits the road

By Paul Deckelman and Paul A. Harris

New York, April 21 – High-yield primary activity opened on Thursday with terms having emerged on a large new secured note offering from security alarm company Protection 1 that actually priced on Wednesday.

The new bonds jumped in initial aftermarket dealings.

Primaryside players also heard that vitamin and nutritional supplement company NBTY Inc. was shopping a mega-deal-sized senior note offering around, with pricing at this point expected either Thursday afternoon or on Friday.

And syndicate sources heard that specialty chemicals manufacturer PQ Corp. had begun a roadshow for a secured issue that will run through the beginning of next week.

Protection 1 terms emerge

Protection 1, a Chicago-based provider of home and commercial security alarm and protective services, priced $3.14 billion of seven-year second-priority senior secured notes due 2023 (B3/B-) at par to yield 9¼% on Wednesday, according to a market source.

The yield printed at the tight end of the 9¼% to 9½% yield talk.

The bonds are being issued by Prime Security Services Borrower, LLC and Prime Finance, Inc.

Sources said that about $1.89 billion of the issue was sold to qualified institutional buyers, while some $1.25 billion was privately placed with affiliates of Apollo Global Management, LLC, a New York-based private equity firm which acquired Protection 1 and another industry peer, ASG Security, in 2015.

Deutsche Bank Securities Inc. was the left bookrunner. Barclays, Citigroup Global Markets Inc. and RBC Capital Markets Corp. were also joint bookrunners.

Proceeds will be used in connection with the buyout of Boca Raton, Fla.-based competitor ADT Corp. by affiliates of Apollo, and the merger of ADT with Protection 1.

Protection 1 paper pops

Traders said that the new Protection 1 issue immediately moved up when it was freed for secondary activity.

One trader saw the issue get as good as 103 bid, 103½ offered before falling back to around 102 bid, 102¼ offered.

A second trader also saw the bonds up around 103¼ bid but then pegged them in a 101½-to-102 bid context.

Several other traders also located the new bonds trading between 102 and 103 during morning dealings.

NBTY pricing on tap

Among the issues which have not yet priced, a market source said that NBTY, a Ronkonkoma, N.Y.-based manufacturer, marketer, distributor and retailer of vitamins and nutritional supplements – plans to price $1.075 billion of five-year senior notes (Caa1) either Thursday afternoon or on Friday.

The quickly shopped Rule 144A and Regulation S for life offering will come to market via joint bookrunners Barclays, which will bill and deliver, and BofA Merrill Lynch, Credit Suisse Securities (USA) LLC, Morgan Stanley & Co., LLC, UBS Investment Bank, Jefferies LLC and Mizuho Securities.

The notes become callable after two years at par plus 50% of the coupon and feature a two-year 40% equity clawback and a 101% poison put.

Proceeds will be used to repay debt and breakage costs.

Altice issue off

Traders said that Monday’s big new issue of Altice NV’s 7½% senior secured notes due 2026 was trading at slightly lower levels in early Thursday dealings.

They saw the notes at 100 7/8 bid, off from Wednesday’s close in a 101-to-101¼ bid context. Around $9 million of the notes had traded at mid-morning.

The Luxembourg- based telecommunications company priced $2.75 billion of the notes at par on Monday after upsizing the quick-to-market deal from $2.25 billion originally.

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