PetSmart kicks off $2.35 billion two-part notes offering in secured and unsecured tranches

By Paul A. Harris

Portland, Ore., Oct. 26 – PetSmart LLC and PetSmart Finance Corp. plan to market a $2.35 billion two-part offering of high-yield notes through Wednesday, according to a market source.

The deal, which was set to be rolled out on a mid-Monday morning conference call with investors, is coming in secured and unsecured tranches.

The secured tranche comes as $1.2 billion of seven-year senior secured notes (B1/B) callable after three years at par plus 50% of the coupon. A special call provision allows the issuer to redeem 10% of the notes annually at 103 during the non-call period.

The unsecured tranche features $1.15 billion of eight-year senior notes (Caa1/CCC+) callable after three years at par plus 50% of the coupon.

Joint bookrunner Barclays will bill and deliver. J.P. Morgan Securities LLC, Apollo, Credit Suisse Securities (USA) LLC, Citigroup Global Markets Inc., Jefferies LLC, MUFG, RBC Capital Markets Corp., UBS Securities LLC and Wells Fargo Securities LLC are also joint bookrunners.

The Phoenix-based pet specialty retailer plans to use proceeds from the Rule 144A and Regulation S for life deal, along with $1.3 billion equity from its parent, to refinance its existing term loan, its asset-based revolver, its 5 7/8% notes due 2025, its 8 7/8% notes due 2025 and its 7 1/8% notes due 2023.

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