PetSmart offers $2.35 billion notes in secured, unsecured tranches; investor calls through Monday

By Paul A. Harris

Portland, Ore., Jan. 28 – PetSmart LLC and PetSmart Finance Corp. launched a $2.35 billion two-part offering of high-yield notes on a mid-morning global conference call with investors on Thursday, according to market sources.

The deal includes $1.2 billion of seven-year senior secured notes (B1) with initial guidance in the mid-5% area. The notes become callable after three years at par plus 50% of the coupon. A special call provision allows the issuer to redeem 10% of the secured notes annually at 103 during the non-call period.

It also includes $1.15 billion of eight-year senior unsecured notes (Caa1) with initial guidance in the mid-8% area. The unsecured notes become callable after three years at par plus 50% of the coupon.

Investor calls with management are expected to take place through Monday.

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

The Phoenix-based pet specialty retailer plans to use the proceeds plus $1.3 billion of 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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