Johnson Controls spinoff Adient to market $2 billion dollar/euro notes deal starting Monday

By Paul Deckelman

New York, July 29 – Johnson Controls Inc. announced on Friday that its soon-to-be spun-off Adient Global Holdings Ltd. subsidiary plans to sell $2 billion of new notes as part of the financing for that spinoff, consisting of eight-year euro-denominated notes and 10-year dollar-denominated notes, with tranche sizes to be determined.

High-yield syndicate sources said that Adient will market the deal to prospective investors in Europe and the United States, beginning on Monday in London, when there will be an investor group meeting and conference call.

The roadshow moves to Frankfurt and Paris on Tuesday, then crosses the Atlantic and resumes on Wednesday in New York, including a group investor lunch presentation and conference call, followed by a similar lunch meeting on Thursday in Boston, the sources said.

The Rule 144A and Regulation S for life transaction is being brought to market via an underwriting syndicate led by global coordinator Citigroup Global Markets Inc.

Citi will also be the lead bookrunner on the dollar-denominated notes. BofA Merrill Lynch, Goldman Sachs & Co., J.P. Morgan Securities LLC, MUFG, U.S. Bancorp Investments Inc. and Wells Fargo Securities LLC are also joint bookrunners on the dollar-denominated notes.

Co-managers on the dollar notes include Banca IMI, Barclays, BBVA Securities Inc., Commerzbank Capital Markets Corp., Credit Agricole-CIB, ING Financial Markets LLC, Standard Chartered Bank, TD Securities (USA) LLC and UNI Credit Bank AG.

Bookrunners on the euro-denominated portion of the deal are Barclays, which will handle billing and distribution, Credit Agricole and UNI, all of which are active bookrunners, as well as Banca IMI, Commerzbank, ING and Citi.

BofA Merrill Lynch, Goldman Sachs, Industrial and Commercial Bank of China, MUFG, TD, U.S. Bancorp and Wells Fargo will be co-managers on the euro notes.

The euro notes will be non-callable for the life of the issue other than via a make-whole call at 50 basis points over Bunds, while the dollar notes will have call protection for the first five years after issue, other than a make-whole at treasuries plus 50 bps; after that they will be callable under a set schedule.

The euro note have no equity clawback provision, while the dollar notes will allow the redemption of up to 40% of the issue in the first three years at par plus the coupon.

Both halves of the deal will have a change-of-control put provision.

Should the Adient spinoff not occur by July 5, 2017, or should the issuer announce that JCI is no longer pursuing the spinoff of Adient, the issuer will redeem the outstanding bonds at a redemption price equal to 101% of the issue price.

Johnson Controls, a Milwaukee-based maker of industrial and electronic components, plans to spin off its Adient automotive seating and interiors business on Oct. 31.

In addition to the upcoming bond deal, financing for the spinoff will include a $3 billion credit facility, comprised of a $1.5 billion term loan A facility and a $1.5 billion revolving credit facility.

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