Cenveo’s planned $450 million bond issue as part of its plan to take out three outstanding issues is being reworked in an eleventh-hour push several days after the roadshow ended, according to sources. Guidance on an eight-year (non-call four) transaction was pitched last week at 11.5-11.75%, however several variations on size, structure, and yield have been shopped to investors amid delayed execution, sources add.
The existing bonds involved aren’t trading yet, but were being quoted yesterday in the mid-90s, versus around par earlier in the week, sources said, while the CVO shares trading on the NYSE have plunged nearly 10% yesterday, to $3.85, bringing the decline since March 13 to 26%, trade data show.
Investors relay that deal manager Bank of America last week pitched a new structure involving a $300 million issue along with a $75 million convertible credit facility backstopped by the Burton Family, a major Cenveo shareholder, but that’s still uncertain. And talk for the offering had moved up to the mid-12%, sources add.
Bank of America, which helms the bookrunner group including Morgan Stanley, Macquarie, and Barclays, told several investors that the book on the CCC+/Caa2 bond deal was half done late last week, buyside sources said. As such, the underwriters in yet another iteration may reduce the target to $225 million, the sources add.
The Stamford, Conn.-based printing company has upcoming maturities it was aiming to address with this tender. The launch of a tender offer boosted valuation of the paper to around par, from distressed prices a little more than a month ago.
Both subordinated issue are rated CCC+/Caa2 and the 2013s were quoted in the 95 context earlier this morning, down from above par yesterday, sources said, but up from an 80 context in January. And note the 7.875% notes had dipped as low as the high 60s in October, trade data show.
Cenveo outlined its original tender offer, including for its $165 million issue of 10.5% senior notes due 2016 at 101 on Feb. 29, but eventually upped the offer to 105.25, according to company filings. The offer also proposed to buy back $271.1 million of 7.875% subordinated notes due 2013 and $23.2 million of 8.375% subordinated notes due 2014 at $1,002.50 per bond.
An early tender premium of $30 per note applies to all three issues. The early deadline was March 13, and the tender expires at 5:00 p.m. EDT on March 27.
Cenveo has bank debt, second-lien notes, and senior and subordinated notes, which contain a mix of covenants governing repayments and dividends. The most recent tap was two years ago with the $400 million issue of B-/B3 second-lien 8.875% notes due 2018 to repay bank debt. Issuance was at 99.3, but it traded at 93 yesterday, yielding 10.5%, trade data show. – Max Frumes