IAA selling $400 million notes backing dividend related to spinoff; pricing expected Wednesday

By Paul A. Harris

Portland, Ore., May 20 – IAA, Inc. (Insurance Auto Auctions, Inc.) is in the market with a $400 million offering of eight-year senior notes related to KAR Auction Services Inc.'s spinoff of its salvage automobile auction business, according to market sources.

The deal was set to be shopped on a conference call with investors, which was scheduled to get underway at 12:30 p.m. ET on Monday.

Initial price talk is in the 6% area, a trader said.

The Rule 144A and Regulation S for life offering is set to price on Wednesday.

J.P. Morgan Securities LLC, BofA Securities Inc., Barclays, Goldman Sachs & Co. LLC and Morgan Stanley & Co. LLC are the joint bookrunners.

The notes come with three years of call protection.

Proceeds, together with proceeds from an anticipated senior secured credit facility, will be used to pay a special dividend to KAR Auction Services related to KAR's spinoff of IAA and to pay fees related to the spinoff.

The issuing entity will be IAA Spinco, Inc., which will be renamed IAA, Inc.

KAR is a Carmel, Ind.-based facilitator of used car sales, procurement and financing services.

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