PetSmart sets talk in $2.35 billion two-part notes offering, accelerates timing; pricing Friday

By Paul A. Harris

Portland, Ore., Jan. 29 – PetSmart LLC and PetSmart Finance Corp. set price talk in their $2.35 billion two-part offering of high-yield notes, according to market sources.

The deal includes $1.2 billion of seven-year senior secured notes (B2/B) talked to yield 5% to 5¼%, inside of 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.

The offering also includes $1.15 billion of eight-year senior unsecured notes (Caa1/CCC+) talked to yield in the 8% area, tight to initial guidance in the mid-8% area. The unsecured notes become callable after three years at par plus 50% of the coupon.

Dealers accelerated timing. Books close at 12:30 p.m. ET on Friday, and the notes are set to price thereafter. The offer had previously been expected to remain in the market 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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