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US LBM sets price talk for $400M of pay-in-kind notes

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US LBM sets price talk for $400M of pay-in-kind notes

A Barclays-led bookrunner group is circulating price guidance for US LBM Holdings Inc.'s $400 million of six-year holdco pay-in-kind (PIK) toggle notes with an 8%-8.25% all-in yield, inclusive of an original issue discount (OID) of up to one point, sources said.

Books for the deal will close today at 1 p.m. ET, with pricing expected thereafter. Additional bookrunners are BofA Securities, Credit Suisse, RBC Capital Markets, Truist, Deutsche Bank and U.S. Bancorp.

Initial price thoughts for the new issue were in the mid-8% area, according to market sources.

US LBM is a national distributor of specialty building materials and operates more than 250 locations. Bain Capital Private Equity in December 2020 acquired a majority stake in the company from Kelso. Net proceeds from the PIK toggle issuance will be used to return capital to the company's shareholders. BCPE Ulysses Intermediate Inc. is the issuing entity for the bonds.

The notes will be non-callable for two years, with a first call at 102. Structure will also include an up-to-40% equity claw at par plus the cash coupon in year one. In years two and three, up to 100% of the notes may be redeemable at 102 and 101, respectively, using the proceeds from one or more equity offerings, sources noted.

US LBM's existing debt includes $550 million of 6.25% senior notes due January 2029, placed in December 2020 to finance the buyout transaction. Additional funding included a $1.35 billion term loan B (L+375, with a 0.75% Libor floor) and a $300 million delayed-draw term loan.