Wesco PattonAir brings new structure, tranche sizes in $2.18 billion deal; pricing Wednesday

By Paul A. Harris

Portland, Ore., Nov. 13 – Wesco PattonAir brought further structural changes on Wednesday to a junk bond deal that has been in the market since mid-October, sources say.

Now a four-part offering, with the addition of a $100 million tranche of 8.25-year PIK holdco notes to the three tranches that were already in the market, the deal reacquires the $2,175,000,000 size it had when it was upsized from $1 billion, following the withdrawal of a proposed term loan from the market more than a week ago.

As before, the deal features two secured tranches (B3/B). However, those tranches are resized.

An upsized $650 million tranche of five-year notes, which are non-callable for two years, is increased from $600 million. Talk remains unchanged: 8½% coupon at 99 to yield 8¾%.

A downsized $900 million tranche of seven-year notes, which are non-callable for three years, deceased from $950 million. Talk remains unchanged: 9% coupon at 99 to yield 9.2%.

Covenant changes, which had been stiffened in favor of the lenders, remain in place.

Par offers for annual amortizations of 1% in years one and two, 1.5% in year three and 2% in year four and thereafter replace a 1% sinking fund.

An excess cash flow sweep covering both tranches of secured notes increased to 75% from 50%.

A downsized $525 million tranche of eight-year unsecured notes, which are non-callable for three years, (Caa2/CCC+) remains talked with a 13 1/8% coupon at 97 to yield 13.76%. The tranche is downsized from $550 million.

The newest revisions also feature the $100 million tranche of 8.25-year PIK holdco notes, mentioned above. The PIK notes, which come with two years of call protection, come with talk of 13¾% (PIK only) at par.

Books close at 3 p.m. ET on Wednesday, and the deal is set to price and allocate thereafter.

BofA Securities Inc. is the left bookrunner for the Rule 144A for life deal. Deutsche Bank Securities Inc., Jefferies LLC, Barclays, BNP Paribas Securities Corp., Goldman Sachs & Co. LLC and HSBC Securities (USA) LLC are the joint bookrunners.

Proceeds will be used to help fund the buyout of Wesco and fund the merger of Wesco with Pattonair USA, Inc., a provider of supply chain management services for the aerospace and defense industries.

Proceeds from the note sale will also be used to repay debt.

The issuing entity will be Wolverine Escrow, LLC, which is to be merged with an into Wesco Aircraft Holdings, Inc.

Wesco is a Valencia, Calif.-based supply chain services provider to the aerospace industry.

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