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CIT Group bullet notes ink at tight end of guidance, target size

CIT Group this afternoon completed a two-part senior notes offering via joint bookrunners Bank of America, Deutsche Bank, Goldman Sachs, and J.P. Morgan, along with lead manager Credit Agricole, sources said. Terms on the BB-/B1 tranches were inked at the tight end of guidance and target size, totaling $3 billion. Both carry a typical T+50 make-whole call and change-of-control put at 101, according to a filing. This marks the financial-services firm’s fourth bond transaction this year. As with previous deals, proceeds will be used to fund general corporate purposes and to refinance existing notes, particularly the 7% series C notes due 2016 and 2017, according to an SEC filing. CIT has been actively addressing these maturities, most recently with the announced redemption of $600 million of 2016 notes at par on Aug. 20. Terms:

Issuer CIT Group
Ratings BB-/B1
Amount $1.75 billion
Issue senior notes (off the shelf)
Coupon 4.25%
Price 100
Yield 4.25%
Spread T+364
FRN eq. L+344
Maturity Aug. 15, 2017
Call nc
Trade July 31, 2012
Settle Aug. 3, 2012 (t+3)
Jt. Books BAML/DB/GS/JPM
Jt. Lead CAG
Px talk 4.375% area
Notes w/ change-of-control put @101
Issuer CIT Group
Ratings BB-/B1
Amount $1.25 billion
Issue senior notes (off the shelf)
Coupon 5.00%
Price 100
Yield 5.00%
Spread T+350
FRN eq. L+338
Maturity Aug. 15, 2022
Call nc
Trade July 31, 2012
Settle Aug. 3, 2012 (t+3)
Jt. Books BAML/DB/GS/JPM
Jt. Lead CAG
Px talk 5.125% area
Notes w/ change-of-control put @101
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Ventas Realty issues 10-year notes to refinance term loan, RC; terms

Ventas Realty today completed a $275 million offering of 3.25% notes due 2022 at T+188, or 3.37%. The issue was upsized after initially being marketed at $250 million. Today’s sale priced at lower levels than the company’s previous 10-year notes ($600 million of 4.25% notes due March 2022 that were completed on Feb. 1 at T+250, or 4.35%).

Ventas plans to use proceeds from today’s BBB+/Baa2 sale to prepay, in full, a $200 million unsecured term loan due September 2013, which bears interest of 4% per annum; to repay debt under its unsecured revolving credit facility; and for working capital and other general corporate purposes, filings show. As of July 30, Ventas had $370.2 million outstanding under its revolver, which matures in October 2015, filings noted. Terms:

Issuer Ventas Realty
Ratings BBB/Baa2
Amount $275 million 
Issue SEC-registered
Coupon 3.25%
Price 99.027
Yield 3.365%
Spread T+188
Maturity Aug. 15, 2022
Call Make-whole T+30
Trade July 31, 2012
Settle Aug. 3, 2012
Books BAML/JPM/UBS/WFS
Px Talk T+188; guidance T+190 area
Notes Proceeds will be used to repay $200 million of its unsecured term loan due 2013, and its revolver, along with general corporate purposes

 

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High Grade: Ford Motor Credit completes 2nd bond sale since June 7; terms

Ford Motor Credit today completed a $750 million issue of 2.5% notes due January 2016 at T+230, in line with price talk and at the midpoint of guidance. Proceeds will be added to the company’s general funds and will be available for the purchase of receivables, for loans, and for use in connection with the retirement of debt. Of note, the company has $1.75 billion of 7.5% notes due tomorrow. The issue is Ford’s second bond sale since June 7, when the Dearborn, Mich.-based company was included in investment-grade indices following a June 1 upgrade to BBB- by Fitch. The credit is current split rated, with a BB+/Baa3 profile. Terms:

Issuer Ford Motor Credit
Ratings BB+/Baa3/BBB-
Amount $750 million 
Issue SEC-registered
Coupon 2.5%
Price 99.68
Yield 2.598%
Spread T+230
Maturity Jan. 15, 2016
Trade July 30, 2012
Settle Aug. 7, 2012
Books BARC/C/GS/MS/RBC
Px Talk T+230; guidance T+230 (+/-5 bps)
Notes Proceeds will be used for general corporate purposes
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Citigroup markets benchmark 3-year bond issue

Citigroup, in its sixth trip to the market of 2012, is shopping a self-led, benchmark offering of three-year notes today, sources said. The sale has an expected A-/Baa2 profile.

The New York bank’s last three-year maturity, $1.25 billion of 2.65% notes due March 2015, was placed on Feb. 22 at T+230, or 2.71%. The issue traded at lower levels compared to issue spreads earlier today, at T+192, or 2.21%, according to MarketAxess. The notes peaked past reoffer levels on June 1 at T+266, or 2.99%.

Citi completed one of the first transactions of the year on Jan. 3, when it placed $2.5 billion of 4.45% notes due 2017 at T+360, or 4.48%. The notes last traded yesterday at significantly lower levels than reoffer, at T+217, or 2.8%, trade data show.

During the same month, the company placed $1 billion of 5.875% notes due 2042 at T+297, or 5.91%. Yesterday, the notes traded tighter, at T+225, or 4.85%.

Most recently, Citi added $750 million to its 4.5% notes due January 2022 at T+250, or 4.15%. The issue was originally completed in October 2011 at a slightly tighter spread of T+245 but higher reoffer yield of 4.62%. The notes last traded yesterday at T+226, or 3.76%, according to trade data.

Citigroup released second-quarter earnings on July 16, showing a 12% fall in profit, though the results still beat Street expectations. Standard & Poor’s said the quarterly earnings would not affect the company’s rating or outlook. – Gayatri Iyer

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Prince Sports reorganization plan nets bankruptcy court OK

Prince Sports won bankruptcy-court approval of its second amended reorganization plan on Friday, confirming a deal that hands the company’s equity to Authentic Brands Group and gives Prince’s unsecured creditors a recovery of 29%.

U.S. Bankruptcy Judge Kevin Carey signed the order confirming the plan on July 27, following a hearing in Wilmington, Del.

The iconic tennis-racquet manufacturer filed for Chapter 11 protection on May 1, with a proposed plan that would hand the company’s equity to licensing company Authentic Brands Group, which had acquired Prince’s secured debt. Under the proposed plan, Authentic would discharge all of Prince’s $67.2 million of secured debt in exchange for 100% of the new equity interests in the reorganized company. Authentic – a joint-venture formed by Battle Sports Science and Omaha-based investment firm Waitt Company – also agreed to provide the company with a $2.5 million DIP facility.

But the deal would have given holders of roughly $13.8 million of its unsecured debt a recovery valued at just 2.7%. That plan came under fire following the appointment of an unsecured creditors’ committee. (See, “Prince Sports DIP hearing delayed as creditor committee balks,” LCD News, June 1, 2012).

At a June 19 hearing on the disclosure statement, Prince and the creditors’ committee reached a global settlement on an amended plan under which Prince agreed to contribute $4 million in cash to fund a liquidation trust with the authority to pursue potential avoidance actions in the case. Unsecured claims holders can opt for a pro rata share of the funding in lieu of pursuing the avoidance claim, so the apportionment of the $4 million between the financing of the liquidating trust and the payment of settled unsecured claims will depend upon the percentage of claims that opt to settle and a determination to be made by the unsecured creditors’ committee, the disclosure statement and reorganization plan show. – John Bringardner/Alan Zimmerman

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HD Supply add-on high yield bonds price at 107.5 to yield 6.5%

HD Supply this afternoon completed an add-on offering of 8.125% secured notes via bookrunners Bank of America, Goldman Sachs, Barclays, J.P. Morgan, Credit Suisse, Deutsche Bank, Wells Fargo, and UBS, sources said. The company’s return to market after four months met healthy interest, precipitating a $100 million upsizing, to $300 million, and putting the total outstanding in the fully fungible series to $1.25 billion. The B+/B2 notes are non-callable until April 2015, and then are callable at a higher-than-usual first call price of par plus 75% of the coupon. Proceeds will be used for general corporate purposes, initially to repay borrowings under the company’s ABL facility, sources note. Terms:

     
  Issuer HD Supply
  Ratings B+/B2
  Amount $300 million
  Issue add-on secured notes (144A)
  Coupon 8.125%
  Price 107.5
  Yield 6.525%
  Spread T+553
  FRN eq. L+534
  Maturity April 1, 2019
  Call nc3 @ par plus 75% coupon
  Trade July 30, 2012
  Settle Aug. 2, 2012 (t+3)
  Jt. Books BAML/GS/Barc/JPM/CS/DB/WFS/UBS
  Px talk 107.375 area
  Notes upsized by $100 million; total now $1.25 billion; original $950 million priced April 5, 2012 @ par

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Solyndra files Chapter 11 reorg plan, anticipating small recoveries

Bankrupt solar-panel maker Solyndra will pay back a portion of what it owes the U.S. Department of Energy for its $535 million loan guarantee according to the company’s proposed Chapter 11 reorganization plan, filed late Friday with the U.S. Bankruptcy Court in Wilmington, Del. But not much.

The loan guarantee, which Solyndra first applied for in 2006 (See, “Solyndra CRO finds no evidence of wrongdoing in report on DOE loan,” LCD News, March 28, 2012), is split into two tranches for the purposes of the plan. The first, tranche B, consists of $142.8 million in claims, which the company’s disclosure statement says will receive a recovery of 0-17%. The second, tranche D, consists of $385 million in claims and will recover “0% plus, depending on [the] outcome of liquidation efforts.”

The controversial $75 million loan provided by Argonaut Ventures and Madrone Partners, which stepped in line for repayment ahead of the DOE loan during Solyndra’s February 2011 restructuring, will recover 50-100% under the plan. (See, “Politics of solar energy mean uncertainty for Solyndra, others,” LCD News, Sept. 19, 2011). Argonaut and Madrone are serving as sponsors of Solyndra’s bankruptcy plan, providing the company with an exit facility and a settlement fund loan, in exchange for which the creditors’ committee will release any claims and rights of action it has against the prepetition lenders.

The plan incorporates multiple settlements between Solyndra, its creditors’ committee, lenders, creditors, and the WARN plaintiffs pursuing class-action suits against company, according to the disclosure statement. Among other things, Argonaut and Madrone will fund a WARN settlement loan of $3.5 million, although the company says claims asserted by the plaintiffs could exceed $15 million.

About $27 million in general unsecured claims of Solyndra Holdings will recover about 3% on their claims, while $50-120 million in unsecured claims of Solyndra itself will only recover 2.5-6%, according to the plan.

The disclosure statement also suggests that Solyndra Chief Restructuring Officer R. Todd Neilson, in his role as residual trustee once the plan goes into effect, could seek damages for anti-competitive conduct against other solar-panel manufacturers. Fremont, Calif.-based Solyndra filed for Chapter 11 protection last Sept. 6, blaming its failure, in part, on competition from solar-panel manufacturers subsidized by the Chinese government.

Under a recovery analysis conducted by Imperial Capital and filed with the disclosure statement, the net estimated proceeds available for distribution through the plan is about $65 million under the low estimate, and about $125 million under the high estimate. The range remains an estimate because Solyndra is still in the process of liquidating its real estate and intellectual property. Solyndra hired Jones Lang LaSalle Brokerage as its real-estate broker in February, and while Solyndra expects to pull in less than $2 million for its IP, according to the estimate, it anticipates the company’s buildings and land will make up the lion’s share of available funds.

A hearing on the disclosure statement is scheduled for Sept. 7. – John Bringardner

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Estee Lauder places $500M, 2-part bond deal (refinancing)

Estee Lauder today completed a $500 million, two-part offering in line with price talk, and at the some of the lowest levels among 10- and 30-year tenors. The $250 million of 2.5% notes priced at T+85, or 2.36%, the fifth-lowest reoffer yield for a 10-year maturity. The $250 million of 3.7% notes due 2042 priced at T+115, or 3.72%, establishing the third-lowest reoffer yield for long bonds.

Approximately $250 million of the proceeds will be used to redeem the outstanding 7.75% notes due November 2013, and the remainder will be used for general corporate purposes, which could include the repayment of commercial paper and other indebtedness, acquisitions, working-capital needs, and the repurchase of common stock, filings show. As of March 31, the company had $120 million of commercial paper outstanding. Terms:

Issuer Estee Lauder
Ratings A/A2
Amount $250 million 
Issue SEC-registered
Coupon 2.35%
Price 99.911
Yield 2.36%
Spread T+85
Maturity Aug. 15, 2022
Call Make-whole T+15
Trade July 30, 2012
Settle Aug. 2, 2012
Books C/JPM(act)/BNP/GS(pass)
Px Talk T+85; guidance T+90 area
Notes Approx. $250 million of the proceeds will be used to redeem the 7.75% notes due November 2013, and the remainder will be used for general corporate purposes
Issuer Estee Lauder
Ratings A/A2
Amount $250 million 
Issue SEC-registered
Coupon 3.70%
Price 99.711
Yield 3.716%
Spread T+115
Maturity Aug. 15, 2042
Call Make-whole T+20
Trade July 30, 2012
Settle Aug. 2, 2012
Books C/JPM(act)/BNP/GS(pass)
Px Talk T+115; guidance T+120 area
Notes Approx. $250 million of the proceeds will be used to redeem the 7.75% notes due November 2013, and the remainder will be used for general corporate purposes

 

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American Airlines, launching merger review, sends NDA to US Airways, others

American Airlines officially began its process of evaluating potential merger offers, on Friday sending a proposed non-disclosure agreement to US Airways.

In a message to managers, American said the proposed NDAs would be sent to “others” as well as US Airways, but did not name any other parties. As reported, US Airways has publicly stated its desire to merge with American, while published reports have said American would reach out to four other potential partners – JetBlue, Alaska Air, Frontier, and Virgin America.

The company’s message to managers was published Friday afternoon on the Sky-Talk aviation blog of theDallas-Ft. Worth Star-Telegram.

In the message, the company said it developed the NDA together with its creditors’ committee, a constituency in the case that has generally been seen as pressing the company to evaluate potential mergers in connection with its reorganization.

While NDAs are obviously standard operating procedure in potential merger situations, US Airways CEO Doug Parker last week addressed, during US Airways’ second-quarter earnings call, the specific significance of the proposed NDA in the case of American.

“We’ve been told we will receive a non-disclosure agreement, or NDA, shortly and we believe that’ll provide a first assessment of AMR’s intention with respect to the review of strategic alternatives,” Parker said according to a transcript of the July 25 call. “But after reviewing the NDA, if it turns out that this is not the start of the full and fair process we hope for, we’ll have to evaluate our options to ensure that the real parties and interests – AMR employees and creditors – get the chance to evaluate the merits of an AMR-US Airways merger. So that’s where we are. We are currently awaiting more details of the process and we will know much more about next steps after that happens.”

Perhaps with an eye toward a potential public reaction to the NDA from US Airways, American said in its message to employees, “As we move forward, it is our expectation that this process will be concluded confidentially so that all parties can protect their proprietary information and data.” – Alan Zimmerman

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Texas Instruments shops $1B bond deal, its first offering of 2012

Texas Instruments is shopping a $1 billion, SEC-registered offering of three- and seven-year notes via active bookrunners Citi, J.P. Morgan, and Morgan Stanley, along with passive bookrunner Mizuho, sources said. The A+/A1 issue is the semiconductor company’s first sale this year.

Proceeds have been earmarked for general corporate purposes, which could include repurchases of common stock, filings show. As of June 30, the company had bought back $2.43 billion of common stock under its $7.5 billion repurchase program, which was authorized in September 2010.

The Dallas, Texas-based company was last in the market in May 2011 after a decade-long hiatus. It sold $3.5 billion in a four-part deal to fund the $6.5 billion acquisition of National Semiconductor. The sale was completed as $1 billion of floating-rate notes due 2013; $500 million of 0.875% notes due 2013 at T+37.5, or 0.9%; $1 billion of 1.375% notes due 2014 at T+50, or 1.42%; and $1 billion of 2.375% notes due 2016 at T+60, or 2.4%. Of note, the 1.375% notes due 2014 last traded on Friday at T+11, or 0.36%.

Earlier this morning, Standard & Poor’s assigned an A+ rating to the proposed sale. “In our view, TI’s modest financial profile remains intact due to its capacity within the current rating to accommodate the transaction. The rating allows for leverage up to 1.5x through a cycle and we expect adjusted pro forma leverage to rise to about 1.5x from 1.2x as of June 30, 2012, which includes our adjustments for nearly $350 million of operating leases and $440 million of pension liabilities. The rating incorporates our assumption that $1.5 billion of debt maturing in May 2013, will be repaid, and that adjusted leverage should revert below 1.5x over the near term,” the agency said. – Gayatri Iyer