IHO Verwaltungs (Schaeffler) shops €2.05 billion equivalent four-part secured PIK toggle notes

By Paul A. Harris

Portland, Ore., May 21 – IHO Verwaltungs GmbH, the holding company whose interests include manufacturer Schaeffler AG, is in the market with €2.05 billion equivalent of senior secured PIK toggle notes (expected ratings Ba1/BB+/BB+) in four tranches, according to market sources.

The Rule 144A and Regulation S deal includes two euro-denominated tranches: six-year notes with two years of call protection and eight-year notes with three years of call protection. Joint global coordinator Deutsche Bank is the left lead and will bill and deliver for the euro-denominated notes.

The deal also includes two dollar-denominated eight-year notes with three years of call protection and 10-year notes with five years of call protection. Joint global coordinator Citigroup Global Markets Inc. is the left lead and will bill and deliver for the dollar-denominated notes.

The dollar-denominated eight-year notes are talked in the 6% area, while the 10-year notes are talked in the 6 3/8% area, both on top of initial guidance.

The deal was shopped by means of Tuesday investor conference calls.

Books close at 9 a.m. ET on Wednesday. Final tranche sizes and pricing will be set no later than 10 a.m. ET on Wednesday, with re-commitments due one hour later.

Pricing is scheduled to take place no later than noon ET on Wednesday.

BofA Securities and HSBC Securities are the joint bookrunners.

The Herzogenaurach, Germany-based company plans to use the proceeds, together with cash on hand, to fully redeem dollar- and euro-denominated notes due in 2021 and 2023, as well as to repay €150 million under the issuer term facility, and to close out cross-currency hedging arrangements related to certain of the redeemed notes.

The prospective issuer is a holding and finance company underpinned by two investment grade-rated main assets, with a 75.1% stake (representing 100% of the voting rights) in Schaeffler AG and a 36% stake in Continental AG, both global manufacturing companies based in Germany.

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