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Target Hospitality secured bonds price to yield 9.75%; terms

Target Hospitality (Arrow BidCo) has completed a $340 million offering of five-year secured notes wide of price guidance, sources said. Credit Suisse was lead bookrunner for deal, which underwent a raft of covenant revisions before completion.

Proceeds will be used to fund the business combination of Target Lodging, which engages in providing accommodation solutions, and Signor Holdings, which engages in developing, managing, and operating workforce lodging facilities, to form Target Hospitality, and to repay existing debt. Funding also includes an unrated $125 million ABL facility due 2023. Pro forma for the transaction, S&P Global Ratings expects adjusted leverage of 2.7x, and forecasts that leverage will decline to 2.3x by year-end 2020, the rating agency said on March 6.

The merger was announced last November by Platinum Eagle (Nasdaq: EAGL), and under the terms the two companies will become wholly owned subsidiaries of Platinum Eagle. Immediately following the closing of the proposed transactions, Platinum Eagle intends to change its name to Target Hospitality Corp. and remain Nasdaq-listed under a new ticker symbol.

Terms:

Issuer

Target Hospitality

Ratings

B/B2

Amount

$340 million 

Issue

Secured (144A/Reg S for life)

Coupon

9.5%

Price

99.029

Yield

9.75%

Spread

T+729

Maturity

March 15, 2024

Call

non-call two (first call @ par +50% coupon)

Trade

March 12, 2019

Settle

March 15, 2019 (T+3)

Bookrunners

CS/Barc/BAML/DB

Talk

9% area

Notes

Up-to-40% equity claw @ 109.5 until March 15, 2021; up-to-10% of notes may be redeemed at 103 per annum until March 15, 2021; make-whole @ T+50

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