HC2 floats wider price guidance and shorter maturity to push refi in a volatile market

HC2 Holdings bankers are floating wider pricing thoughts and revised terms for its proposed bond refinancing amidst choppy market conditions, according to four buysiders following the deal.

Lead bank Jefferies is now marketing the B-/Caa1 USD 535m senior secured bond offering as three year non-call 1.5 year paper, versus the original five-year non-call two year structure, the sources said. Price whispers have widened to a 10% coupon with a 97.5 OID from initial whispers in the 9.25%-9.5% range.

The roadshow may last until later this week or seep into early next week, though Jefferies initially aimed to conclude it today, speculated two of the sources.

Proceeds for the bond refinance the company’s existing USD 510m 11% senior secured notes due 2019. The 11% notes softened slightly today to trade at 99.5 to yield 11.482%, from trades at par at the beginning of the roadshow last week, according to MarketAxess.

HC2 is a diversified holding company with eight reportable segments: construction, marine services, energy, telecommunications, life sciences, broadcasting, insurance and other, according to company documents.

Moody’s estimates that HC2’s leverage at 30 June was 11.1x, but its 12-18 month forward view is that leverage will decline to 7.6x, according to a 24 October credit report.

Sources attribute jitters in the high yield primary market to the recent equities selloff, as the S&P 500 has shed more than 8.5% from its all-time high in September and the Dow Jones Industrial Average is off by more than 7.6%. Amid the volatility, GFL Environmental scrapped the bond portion of its M&A financing in favor of a larger loan, while KLX Energy widened pricing to 11.5% for its proposed bond.

Jefferies declined to comment. The company did not respond to a request for comment.

2018 Debtwire

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