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Neiman Marcus completes $1.56B, 2-part bond offering, backs buyout by Ares

Neiman Marcus Group today completed a two-part offering of senior notes via bookrunners Credit Suisse, RBC, Deutsche Bank, Goldman Sachs, and Morgan Stanley, according to sources. Pricing for the cash-pay notes came at the midpoint of talk while the PIK-toggle notes printed at the tight end of its guidance. Take note the first call premium for both is par plus a 75% coupon to balance the shorter-than-usual call schedule, as well as a higher-than-typical equity clawback feature, at up to 40% of the issue, during the non-call period. Issuance is under Rule 144A for life and technically at Mariposa Borrower. The deal backs a $6 billion buyout of the upscale retailer by Ares Management and Canada Pension Plan Investment Board. Management will retain a minority stake. Financing also includes a $2.95 billion, seven-year covenant-lite term loan and an $800 million, five-year asset-based revolver. More specifically, proceeds will fund the acquisition and repay all outstanding amounts under Neiman’s credit facilities. As of April 27, the company reported $2.56 billion of term loans as well as $20 million under an ABL facility, according to an SEC filing. Neiman’s $125 million of 7.125% notes due 2028 are expected to remain outstanding. Terms:

Issuer Neiman Marcus Group
Ratings CCC+/Caa2
Amount $960 million
Issue senior notes (144A-life)
Coupon 8.00%
Price 100
Yield 8.00%
Spread T+565
FRN eq. L+547
Maturity Oct. 15, 2021
Call nc3; 1st call @ par +75% of coupon
Trade Oct. 16, 2013
Settle Oct. 21, 2013 (T+3)
Joint Bookrunners CS/RBC/DB/GS/MS
Co-leads
Co’s.
Px talk 8% area
Notes w/ three-year equity clawback for 40% @ 108; subject to T+50 make-whole call; w/ change-of-control put @ 101.
Issuer Neiman Marcus Group
Ratings CCC+/Caa2
Amount $600 million
Issue senior PIK-toggle notes (144A-life)
Coupon 8.75% (cash)/9.5% (PIK)
Price 100
Yield 8.75%
Spread T+640
FRN eq. L+622
Maturity Oct. 15, 2021
Call nc3; 1st call @ par +75% of coupon
Trade Oct. 16, 2013
Settle Oct. 21, 2013 (T+3)
Joint Bookrunners CS/RBC/DB/GS/MS
Co-leads
Co’s.
Px talk +75-100 bps/cash-pay notes
Notes w/ three-year equity clawback for 40% @ 108.75; subject to T+50 make-whole call; w/ change-of-control put @ 101.

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