Allied Universal ups two-part bonds to $1.85 billion, sets talk, alters covenants; pricing Thursday

By Paul A. Harris

Portland, Ore., June 27 – Allied Universal Holdco LLC upsized its offering of high-yield notes to $1.85 billion from $1.55 billion on Thursday, increasing the size of the secured notes tranche while downsizing the concurrent term loan, according to market sources.

The revised deal features an upsized $800 million tranche of seven-year senior secured notes (B3/B-/BB-) talked to yield in the 6¾% area, tight to the 6¾% to 7% initial guidance. The secured tranche was heard to be two-times oversubscribed at its original $500 million size on Wednesday.

With the $300 million upsizing of the secured notes the concurrent seven-year covenant-lite first-lien term loan downsized to $2.22 billion from $2.52 billion.

The size of the unsecured tranche – $1.05 billion of eight-year senior unsecured notes (Caa2/CCC/CCC+) – remains unchanged. Official talk has the unsecured notes coming with a coupon in the 9% area at a discount to yield 10%.

That yield would bring it 25 basis points wide of the wide end of initial talk that had the unsecured tranche pricing 250 bps to 300 bps behind the secured tranche.

The unsecured notes also underwent covenant changes primarily bearing upon how the company may disburse cash and incur additional debt.

Books close at 12:30 p.m. ET on Thursday, and the bonds are set to price thereafter.

Credit Suisse Securities (USA) LLC is the left lead bookrunner. Barclays, Citigroup Global Markets Inc., Deutsche Bank Securities Inc., HSBC Securities (USA) Inc., Morgan Stanley & Co. LLC, RBC Capital Markets LLC, SG Americas Securities LLC, Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC and Wells Fargo Securities LLC are the joint bookrunners.

ING and Raymond James & Associates Inc. are the co-managers.

The bonds in both tranches come with three years of call protection.

The Conshohocken, Pa.-based facilities services provider plans to use the proceeds to pay off debt under its credit facilities and redeem its existing notes.

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