Morning Commentary: Salem Media, Tallgrass Energy, Tapstone Energy pricings seen possible

By Paul Deckelman

New York, May 11 – The high-yield primary market is expected to calm down a little on Thursday after two hectic sessions which have seen a total of $4.9 billion of new U.S. dollar-denominated and fully junk-rated paper from domestic or industrialized-country borrowers come to market in 10 tranches.

In contrast, syndicate sources see just three deals collectively worth $755 million on the forward calendar and ready to get done – two which were heard specifically as being likely Thursday pricings and a third deal which started being shopped around last week and whose roadshow has been completed.

Salem Media talk tightens

Salem Media Group Inc.’s planned $255 million issue of seven-year senior secured notes is expected to price on Thursday, with the bonds likely yielding in the 6¾% to 6 7/8% area.

That revised talk, released on Wednesday afternoon, represents a tightening from the 7% to 7¼% area talk which had been heard earlier Wednesday.

Order books were closed on Wednesday afternoon for accounts on or around the U.S. East Coast and were scheduled to close on Thursday morning for West Coast accounts.

Investors were asked to reconfirm their orders by 10 a.m. ET on Thursday, with pricing expected any time thereafter.

The Rule 144A and Regulation S offering is being brought to market via bookrunner Wells Fargo Securities LLC, along with co-managers Barclays and Noble Capital Markets.

Salem, a Camarillo, Calif.-based domestic multimedia company specializing in Christian and politically conservative content, with media properties comprising radio broadcasting, digital media and publishing outlets, will also concurrently be entering into a new senior secured asset-based revolving credit facility.

The company plans to use the proceeds from the bond deal and the ABL facility to refinance outstanding debt, to pay offering fees and expenses and for general corporate purposes.

Tallgrass talked around

Tallgrass Energy Partners, LP, is meanwhile planning to sell a $200 million add-on to its existing 5½% senior notes due Sept. 15, 2024, with pricing on that tap anticipated for Thursday.

Books will close at noon ET, with pricing expected sometime thereafter.

Price talk on the issue of 99.5 to par emerged on Thursday morning.

The Rule 144A and Regulation S for life add-on tranche announced on Wednesday will be brought to market via joint bookrunners Credit Suisse Securities (USA) LLC, Capital One Securities, Inc. Citigroup Global Markets Inc., Morgan Stanley & Co. LLC, MUFG and PNC Capital Markets LLC.

The notes will be immediately fungible with the company’s $400 million of existing 5½% notes due 2024, which it sold last August.

Tallgrass, a Leawood, Kan.-based publicly traded, growth-oriented limited partnership that owns, operates, acquires and develops midstream energy assets in North America, plans to use the proceeds from the add-on deal to repay revolving credit facility debt.

Tapstone still on tap

Another possible pricing is Tapstone Energy LLC, an Oklahoma City-based independent oil and natural gas company, which began shopping around a $300 million offering of five-year senior notes last week via BofA Merrill Lynch.

That deal’s roadshow wrapped up on Tuesday, with pricing a possibility any time thereafter.

The company plans to use the deal proceeds for debt refinancing.

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