content

Realogy three-part bonds price; terms

The $3.125 billion, three-part Realogy LBO offering was completed this afternoon via joint bookrunners J.P. Morgan, Credit Suisse, Bear Stearns and Citigroup, according to sources. Terms nailed guidance, albeit after a revision 50 bps wider than initially planned. Additionally, a number of covenants were reworked to the benefit of bondholders, such as ability to make dividend payments, among others. Still, with these changes the deal saw strong buying interest, and gray-market indications suggest at least a one-point gain on the break. Improving market conditions this week certainly underpinned execution.

Despite real-estate-market headline risk, high leverage at 7x, and the possibility of further deterioration in the housing sector, accounts like the company’s experienced management, forecast for positive free cash flow this year, strong brand portfolio (which includes Century 21 and Coldwell Banker), and longer-term prospects.

Proceeds back Apollo Management’s LBO of the real-estate brokerage firm. Additional support comes from a $3.225 billion senior secured credit facility, a $1.99 billion equity commitment from Apollo and a $1.062 billion receivables securitization, sources said. Terms:

Issuer: Realogy Corp
Ratings: B-/Caa1
Size: $1.7 billion
Issue: senior notes (144A)
Coupon: 10.50%
Price: 98.786
Yield: 10.75%
Spread: +615
LIBOR Eq: +565
Maturity: April 15, 2014
Call: nc4
Trade: April 5, 2007
Settle: April 10, 2007 (t+2)
Books: JPM/CS/BEAR/CITI
Co’s: BARC, CALYON
Px Talk: 10.75% (revised from 10-10.25%)
Notes: calls: 2011 @105.25; 2012 @102.625; 2013 @par; carries T+50 make-whole provision during first four years; w/ three-year equity clawback for up to 35% of issue @110.5; w/ change-of-control put @101
Issuer: Realogy Corp
Ratings: B-/Caa1
Size: $550 million
Issue: senior PIK toggle notes (144A)
Coupon: 11.00% (steps to 11.75% when PIK)
Price: 98.805
Yield: 11.25%
Spread: +665
LIBOR Eq: +615
Maturity: April 15, 2014
Call: nc4
Trade: April 5, 2007
Settle: April 10, 2007 (t+2)
Books: JPM/CS/BEAR/CITI
Co’s: BARC, CALYON
Px Talk: 11.25% (revised from 37.5 bps behind senior notes)
Notes: calls: 2011 @105.5; 2012 @102.75; 2013 @par; carries T+50 make-whole provision during first four years; w/ three-year equity clawback for up to 35% of issue @111; w/ change-of-control put @101
Issuer: Realogy Corp
Ratings: B-/Caa2
Size: $875 million
Issue: senior subordinated notes (144A)
Coupon: 12.375%
Price: 98.146
Yield: 12.75%
Spread: +812
LIBOR Eq: +761
Maturity: April 15, 2015
Call: nc4
Trade: April 5, 2007
Settle: April 10, 2007 (t+2)
Books: JPM/CS/BEAR/CITI
Co’s: BARC, CALYON
Px Talk: 12.75% (revised from 150 bps behind senior notes)
Notes: calls: 2011 @106.188; 2012 @104.125; 2013 @par; carries T+50 make-whole provision during first four years; w/ three-year equity clawback for up to 35% of issue @112.375; w/ change-of-control put @101