Prestige Brands circulates guidance for $500M of 10-year unsecured notes

Prestige Brands Inc. has set price talk for a $500 million offering of 10-year (non-call five) unsecured notes in the 3.875% area, according to market sources. Books for the deal will close today at 1 p.m. ET. Final terms are expected thereafter via Morgan Stanley (lead left, B&D), Barclays, Citi, RBC Capital Markets and Deutsche Bank.

Proceeds of the deal, together with cash and drawings from an ABL facility, will redeem all of Prestige Brands' $600 million of 6.375% notes due 2024. The firm announced the deal in a statement this morning adding it expects to give notice of the redemption at a price of 101.594.

The new issue has been assigned B+/B2 ratings, reflecting a one-notch upgrade on Feb. 9 at Moody's for the company's unsecured debt. Moody's also raised the corporate family rating to B1 from B2, and its senior secured term loan rating to Ba2 from Ba3.

"The upgrade reflects Prestige's stable operating performance and Moody's view that Prestige will continue to generate meaningful free cash flow in a $200 million annual range, and that financial leverage will continue to improve through debt repayment and low-to-mid single digit earnings growth," Moody's said.

Prestige Brands markets and distributes brand-name consumer over-the-counter healthcare products and household-cleaning products in the U.S., Canada, Australia and other international markets.

The firm was last seen in high yield in November 2019 when it placed $400 million of 5.125% unsecured notes due January 2028, which closed at 106.97 last night, for a yield to worst of 2.694%, according to data from S&P Global Market Intelligence.